Supreme Court of the United States

Transcription

1 No IN THE Supreme Court of the United States NAUTILUS, INC. v. Petitioner, BIOSIG INSTRUMENTS, INC., Respondent. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT BRIEF FOR NOVA CHEMICALS INC., AETNA INC., MICRON TECHNOLOGY, INC., GENERAL MOTORS LLC, EMC CORPORATION, INTEL CORPORATION, AND THERMO FISHER SCIENTIFIC INC. AS AMICI CURIAE SUPPORTING PETITIONER DONALD R. DUNNER* DARREL C. KARL MARK J. FELDSTEIN RONALD A. BLEEKER FINNEGAN, HENDERSON, FARABOW, GARRETT & DUNNER, LLP 901 New York Ave., NW Washington, DC SETH P. WAXMAN Counsel of Record THOMAS G. SAUNDERS CHRISTINA MANFREDI MCKINLEY WILMER CUTLER PICKERING HALE AND DORR LLP 1875 Pennsylvania Ave., NW Washington, DC (202) * Counsel for NOVA Chemicals Inc. ADDITIONAL COUNSEL LISTED ON INSIDE COVER

2 H. WOODRUFF TURNER* K&L GATES LLP 210 Sixth Avenue Pittsburgh, PA WILLIAM C. MITCHELL* GARY F. MATZ NOVA CHEMICALS INC Coraopolis Heights Rd. Pittsburgh, PA ARI SAVITZKY WILMER CUTLER PICKERING HALE AND DORR LLP 7 World Trade Center 250 Greenwich Street New York, NY * Counsel for NOVA Chemicals Inc.

3 TABLE OF CONTENTS Page TABLE OF AUTHORITIES... iii INTEREST OF AMICI CURIAE... 1 INTRODUCTION AND SUMMARY... 3 ARGUMENT... 6 I. THE PATENT ACT REQUIRES PARTICULARITY IN PATENT CLAIMING... 6 II. THE FEDERAL CIRCUIT S STANDARD DEVIATES FROM THE STATUTORY REQUIREMENTS AND THIS COURT S PRECEDENT III. THE FEDERAL CIRCUIT S STANDARD STIFLES BUSINESS AND INNOVATION A. The Federal Circuit s Standard Encourages Ambiguity In Claim Drafting B. The Uncertainty Created By The Federal Circuit s Standard Comes At Great Expense To Businesses And To The Public (i)

4 ii TABLE OF CONTENTS Continued Page 1. The Federal Circuit s acceptance of vague and ambiguous claims reduces total investment in innovation The Federal Circuit s acceptance of ambiguous claims taxes innovators with massive litigation costs IV. THIS COURT SHOULD REQUIRE THAT PATENTS PROVIDE CLEAR NOTICE OF CLAIM SCOPE CONCLUSION... 26

5 iii TABLE OF AUTHORITIES CASES Page(s) Ariad Pharmaceuticals, Inc. v. Eli Lilly & Co., 598 F.3d 1336 (Fed. Cir. 2010) Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313 (1971)... 8 Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141 (1989)... 7, 19 Chiuminatta Concrete Concepts, Inc. v. Cardinal Indus., Inc., 145 F.3d 1303 (Fed. Cir. 1998) Datamize LLC v. Plumtree Software, Inc., 417 F.3d 1342 (Fed. Cir. 2005) Dow Chemical Co. v. NOVA Chemicals Corp. (Canada), 629 F. Supp. 2d 397 (D. Del. 2009) Dow Chemical Co. v. NOVA Chemicals Corp., 458 F. App x 910 (Fed. Cir. 2012)... 12, 25 Enzo Biochem, Inc., v. Applera Corp., 599 F.3d 1325 (Fed. Cir. 2010)... 13, 14 Eon-Net LP v. Flagstar Bancorp, 653 F.3d 1314 (Fed. Cir. 2011) Exxon Research & Engineering Co. v. United States, 265 F.3d 1371 (Fed. Cir. 2001)... 11, 12 Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722 (2002) Fisher-Price, Inc. v. Graco Children s Products, Inc., 154 F. App x 903 (Fed. Cir. 2005)... 14

6 iv TABLE OF AUTHORITIES Continued Page(s) Hearing Components, Inc. v. Shure Inc., 600 F.3d 1357 (Fed. Cir. 2010)... 11, 25 Keystone Bridge Co. v. Phoenix Iron Co., 95 U.S. 274 (1877) Litton Systems, Inc. v. Honeywell, Inc., 87 F.3d 1559 (Fed. Cir. 1996)... 9 LNP Engineering Plastics, Inc. v. Miller Waste Mills, Inc., 275 F.3d 1347 (Fed. Cir. 2001) Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996)... 7, 10, 17, 22 McClain v. Ortmayer, 141 U.S. 419 (1891)... 17, 21 Medtronic, Inc. v. Mirowski Family Ventures, LLC, 134 S. Ct. 843 (2014)... 8 Merrill v. Yeomans, 94 U.S. 568 (1877)... 7, 21 NOVA Chemicals Corp. v. Dow Chemical Co., 133 S. Ct. 544 (2012)... 1 Oakley, Inc. v. Sunglass Hut International, 316 F.3d 1331 (Fed. Cir. 2003) Permutit Co. v. Graver Corp., 284 U.S. 52 (1931) Pfaff v. Wells Electronics, Inc., 525 U.S. 55 (1998) Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005)... 12

7 v TABLE OF AUTHORITIES Continued Page(s) Precision Instrument Manufacturing Co. v. Automotive Maintenance Machinery Co., 324 U.S. 806 (1945)... 8 Southwall Technologies, Inc. v. Cardinal IG Co., 54 F.3d 1570 (Fed. Cir. 1995) State Industries, Inc. v. A.O. Smith Corp., 751 F.2d 1226 (Fed. Cir. 1985)... 9 United Carbon Co. v. Binney & Smith Co., 317 U.S. 228 (1942)... 8, 17, 21 Universal Oil Products Co. v. Globe Oil & Refining Co., 322 U.S. 471 (1944)... 8, 21, 22 STATUTES AND LEGISLATION 35 U.S.C passim Act of July 4, 1836, 5 Stat Act of July 8, 1870, 16 Stat Leahy-Smith America Invents Act, Pub. L. No , 125 Stat. 284 (2011)... 6 OTHER AUTHORITIES American Intellectual Property Law Association, Report of the Economic Survey 2011 (July 2011) Bessen, James & Michael J. Meurer, Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators At Risk (2008) Executive Office of the President, Patent Assertion and U.S. Innovation (June 2013)... 20

8 vi TABLE OF AUTHORITIES Continued Page(s) FTC, The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition (Mar. 2011) Jaffe, Adam B. & Josh Lerner, Innovation and Its Discontents (2004) Landes, William M. & Richard A. Posner, The Economic Structure of Intellectual Property Law (2003) Merton, Robert K., On the Shoulders of Giants: A Shandean Postscript (1965)... 9 Mullally, Kelly Casey, Legal (Un)certainty, Legal Process, and Patent Law, 43 Loy. L.A. L. Rev (2010) Nard, Craig Allen, Certainty, Fence Building, and the Useful Arts, 74 Ind. L.J. 759 (1999)... 9 Plager, S. Jay, Challenges for Intellectual Property Law in the Twenty-First Century: Indeterminacy and Other Problems, 2001 U. Ill. L. Rev. 69 (2001) Plager, S. Jay, The Federal Circuit as an Institution: On Uncertainty and Policy Levers, 43 Loy. L.A. L. Rev. 749 (2010) Sichelman, Ted & Stuart J.H. Graham, Patenting by Entrepreneurs: An Empirical Study, 17 Mich. Telecomm. & Tech. L. Rev. 111 (2010) Slusky, Ronald D., Invention Analysis and Claiming: A Patent Lawyer s Guide (2007)... 16

9 vii TABLE OF AUTHORITIES Continued Page(s) Thomas, John R., Claim Re-Construction: The Doctrine of Equivalents in the Post- Markman Era, 87 J. Pat. & Trademark Off. Soc y 781 (2005)... 12

10 INTEREST OF AMICI CURIAE 1 Amici are a collection of large and small companies spanning a wide range of industries, including manufacturing, technology, insurance, and biotechnology. Amici both hold patents of their own and defend against infringement claims brought by others, and therefore have an interest in ensuring a balanced patent system. This case presents an important question regarding the propriety of the Federal Circuit s test for ascertaining claim indefiniteness. Many amici have experienced firsthand through litigation the adverse consequences caused by the Federal Circuit s insolubly ambiguous or amenable to construction test. Other amici have been required to factor the uncertainties produced by the Federal Circuit s test into their business decisions. Amici thus have a unique perspective on the question presented and share a significant interest in ensuring that the Patent Act s definiteness requirement is applied in the fashion Congress intended. NOVA Chemicals Inc. is a leading producer of plastics and chemicals designed for use in everyday products, such as food packaging, and a wide variety of industrial products. It previously petitioned this Court seeking review of the Federal Circuit s definiteness standard, see NOVA Chemicals Corp. v. Dow Chemical 1 Pursuant to Supreme Court Rule 37.6, counsel for amici state that no counsel for a party authored this brief in whole or in part. No person other than amici or its counsel made a monetary contribution to this brief s preparation or submission. Pursuant to Supreme Court Rule 37.2, amici state that counsel of record for both petitioner and respondent were timely notified of the intent to file this brief. Both petitioner and respondent have filed letters granting blanket consent to the filing of amicus briefs.

11 2 Co., 133 S. Ct. 544 (2012), and has a strong interest in the adoption of a more balanced standard. Aetna Inc. is one of the nation s leading health care benefits companies. Aetna offers a broad range of health insurance products and related services, including medical, pharmacy, dental, behavioral health, group life, and disability plans, as well as medical management capabilities and health care management services. Micron Technology, Inc. is a leading, global, semiconductor company that designs, manufactures, and sells advanced, high performance, memory solutions. Backed by more than 35 years of technology leadership, Micron s memory solutions enable the world s most innovative computing, consumer, enterprise storage, networking, mobile, embedded, and automotive applications. Micron contributes billions of dollars in annual sales to the U.S. and world economy, annually invests hundreds of millions of dollars in research and development, and employs thirty thousand people both in the United States and overseas. Micron is a firm believer in a balanced patent system and holds over fifteen thousand United States patents. General Motors LLC is part of General Motors Company, one of the world s leading automobile manufacturers. General Motors is focused on developing innovative technologies to shape the future of the automotive industry, and is among the leading recipients of U.S. patent grants. EMC Corporation is a global leader in enabling businesses and service providers to transform their operations and deliver IT as a service. Fundamental to this transformation is cloud computing. Through innovative products and services, EMC accelerates the journey to cloud computing, helping IT departments to

12 3 store, manage, protect, and analyze their most valuable asset information in a more agile, trusted, and costefficient way. EMC and its majority owned federated businesses hold approximately 4,300 patents issued by the U.S. Patent and Trademark Office and employ over 60,000 people worldwide. Intel Corporation is the world s leading semiconductor manufacturer and a major producer of computer, networking, and communications hardware and software. Intel s business depends on systems that incorporate a large number of components and perform a variety of functions. As a result, Intel must frequently defend against allegations of patent infringement. At the same time, Intel owns thousands of its own patents and has an interest in maintaining a balanced patent system. Thermo Fisher Scientific Inc. is a leading developer and manufacturer of scientific instruments, reagents, equipment and consumables, software, and services for research, analysis, discovery, and diagnostics. It owns thousands of patents and has been patentee or defendant in numerous lawsuits, and has a strong interest in clarification of the indefiniteness standard from the point of view of both plaintiff and defendant. INTRODUCTION AND SUMMARY Section 112 of the Patent Act requires that patents particularly point out and distinctly claim the subject matter they cover. This requirement serves a critical notice function, informing the public of the scope of a patentee s exclusive rights and guiding the decisions of innovators and competitors. Notwithstanding the statutory mandate and this Court s precedent stressing the notice function, the Federal Circuit applies a lax defi-

13 4 niteness standard that is satisfied whenever a court is able to give some meaning to a vague or ambiguous claim no matter how difficult the task, how reasonable the disagreement about the claim s meaning, or how far beyond the patent a person of ordinary skill in the art must look to try to understand the claim. The Federal Circuit s diluted version of the definiteness requirement upsets the delicate balance the Patent Act strikes between rewarding innovation and encouraging competition. The consequences of that disruption are far from academic. The Federal Circuit s standard exacts a high toll on businesses which, without the degree of certainty the definiteness requirement of 112 is supposed to provide, must either steer well clear of ambiguous claims, thereby effectively increasing the scope of those claims beyond their proper bounds, or else risk a suit for infringement. This in turn has severe economic consequences for the public, which is unable to benefit from competition and innovation that otherwise would occur. Patent owners are in the best position to avoid ambiguous claims. But because the Federal Circuit s standard lets them shift the burden of ambiguous claims onto the public, they have insufficient incentive to ensure that their claims are clear and precise, particularly when weighed against the countervailing incentive to draft claims that are as broad and flexible as possible. This Court should repudiate the Federal Circuit s standard and reaffirm that 112 requires clear notice of claim scope. The determination whether any particular claim fails to provide clear notice is necessarily casespecific, but there are a number of common principles

14 5 and warning signs that indicate that a claim has not provided sufficient guidance. First, claims must particularly describe what is claimed and point out the limitations of those claims, so that it is clear both what the claimed invention is and what it is not. Second, a person of ordinary skill should be able to readily ascertain the meaning of a claim by looking at the claims and the specification. Unsupported assertions by an expert that claims are understandable should not be sufficient to defeat a definiteness challenge. Third, when construing a claim requires undue effort, the correct construction is genuinely doubtful, or there is substantial and reasonable disagreement among persons of ordinary skill as to the claim s meaning, it indicates that the claims did not clearly communicate their scope to skilled artisans. Fourth, when a patent uses vague terms with no established meaning in the art, courts should insist that the specification clarify the meaning of those terms. Fifth, courts should be deeply suspicious of subjective terms in patent claims. Sixth, when patents use terms of degree, the specification must supply a standard for measuring that degree. Seventh, when claims refer to measurements or equations, it should be clear from the specification how the measurement should be taken and what units are being used. These principles do not exhaust what it means to provide clear notice, but they would go a long way to-

15 6 ward achieving a more balanced application of 112, 2, ensuring significant benefits to innovators and the public alike. ARGUMENT I. THE PATENT ACT REQUIRES PARTICULARITY IN PA- TENT CLAIMING Section 112 of the Patent Act instructs applicants on the requirements they must fulfill to disclose and claim their inventions. 35 U.S.C. 112 (entitled Specification ). Section 112, 1 requires that the specification describe and enable the invention and the manner and process of making and using it. Section 112, 2 states that the specification must conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention. 35 U.S.C. 112, 2. 2 This latter provision is known as the definiteness requirement. By its plain terms, this provision requires that inventions be claimed particularly and distinctly. The word particularly indicates that a 2 The Leahy-Smith America Invents Act ( AIA ), Pub. L. No , 4(c), 125 Stat. 284, 296 (2011), changed the word applicant to inventor or a joint inventor and redesignated 35 U.S.C as 112(b). Those minor changes did not alter the requirement of particularly pointing out and distinctly claiming the subject matter covered by the patent, which dates back more than a century. See Act of July 8, 1870, ch. 230, 26, 16 Stat. 198, 201 ( particularly point out and distinctly claim ); see also Act of July 4, 1836, ch. 357, 6, 5 Stat. 117, 119 ( particularly specify and point out ). Section 112(b) applies only to patent applications filed on or after September 16, AIA 4(e), 125 Stat. at 297. Because the patent-in-suit issued prior to that date, this brief refers to the pre-aia version of 112, but the analysis applies equally to 112(b).

16 7 claim must be described with specificity, not with vague terms that could encompass several different possible scopes. The word distinctly similarly confirms the precision with which the claim language must differentiate the invention. Congress thus emphasized in 112, 2 that a claim s boundaries must clearly and unambiguously distinguish what the patentee has claimed from what remains in the public domain. The primary purpose of the definiteness requirement is to ensure that patents provide clear notice of the scope of their claims. Achieving that clarity benefits the public, competitors, courts, and patentees alike. The patent system embodies a carefully crafted bargain that encourages the creation and disclosure of new, useful, and nonobvious advances in technology in return for the exclusive right to practice the invention for a period of years. Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, (1989). As part of that bargain, [t]he public should not be deprived of rights supposed to belong to it, without being clearly told what it is that limits these rights, and nothing can be more just and fair, both to the patentee and to the public, than that the former should understand, and correctly describe, just what he has invented, and for what he claims a patent. Merrill v. Yeomans, 94 U.S. 568, (1877). The patentee thus must not only describe and enable its invention, see 112, 1, but also precisely define the limits of its claims, see 112, 2. See also Markman v. Westview Instruments, Inc., 517 U.S. 370, 373 (1996). Requiring clarity in claim drafting provides a critical check against unwarranted expansion of the patent monopoly. As the Court observed earlier this Term, the public has a paramount interest in seeing that patent monopolies are kept within their legitimate

17 8 scope. 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. Medtronic, Inc. v. Mirowski Family Ventures, LLC, 134 S. Ct. 843, (2014) (quoting Precision Instrument Mfg. Co. v. Automotive Maint. Mach. Co., 324 U.S. 806, 816 (1945); Blonder-Tongue Labs., Inc. v. University of Ill. Found., 402 U.S. 313, (1971)) (second, third, and fourth alterations in original). Claims are required to be specific for the very purpose of protecting the public against extension of the scope of the patent. Universal Oil Prods. Co. v. Globe Oil & Ref. Co., 322 U.S. 471, (1944). Clear notice of claim scope is also vital to competitors who must make investments and strategic business decisions based on an understanding of what patents prohibit and permit. See United Carbon Co. v. Binney & Smith Co., 317 U.S. 228, 232 (1942) ( The inventor must inform the public during the life of the patent of the limits of the monopoly asserted, so that it may be known which features may be safely used or manufactured without a license and which may not. (internal quotation marks omitted)). This Court has long recognized the serious problems that are created when ambiguous patent claims give rise to a zone of uncertainty which enterprise and experimentation may enter only at the risk of infringement claims. United Carbon, 317 U.S. at 236. This uncertainty discourage[s] invention only a little less than unequivocal foreclosure of the field. Id. Judge Bryson has likewise observed: Patent counselors should be able to advise their clients, with some confidence, whether to proceed with a product or process of a particular

18 9 kind. The consequences of advice that turns out to be incorrect can be devastating, and the costs of uncertainty unjustified caution or the devotion of vast resources to the sterile enterprise of litigation can be similarly destructive. Litton Sys., Inc. v. Honeywell, Inc., 87 F.3d 1559, 1580 (Fed. Cir. 1996) (Bryson, J., concurring in part and dissenting in part), vacated, Honeywell, Inc. v. Litton Sys., Inc., 520 U.S (1997). Uncertainty not only erodes competition but also interferes with the incentive to design around a patent. One of the benefits of a patent system is its so-called negative incentive to design around a competitor s products, even when they are patented, thus bringing a steady flow of innovations to the marketplace. State Indus., Inc. v. A.O. Smith Corp., 751 F.2d 1226, 1236 (Fed. Cir. 1985). But [a] competitor, whether designing around or improving upon the claimed invention, must have confidence in where exactly the patentee built his fence so that he can proceed accordingly. Nard, Certainty, Fence Building, and the Useful Arts, 74 Ind. L.J. 759, 775 (1999). Otherwise, fearful of standing upon shoulders greased by uncertainty, competitors may channel their inventive energies to an unrelated technological field Id. at Clear claims also benefit patentees in the long run. Although ambiguous claims can be manipulated for short-term gain, long-term investment depends on certainty and stability. Until the scope of ambiguous pa- 3 In an often quoted statement about innovation, Isaac Newton reportedly said, If I have seen farther, it is by standing on the shoulders of giants. See Merton, On the Shoulders of Giants: A Shandean Postscript (1965) (tracing the origins of Newton s statement).

19 10 tent claims is clarified in litigation, the same uncertainty that causes competitors to steer clear of ambiguous claims also erodes the confidence needed for the type of investment that will benefit both the patentee and the public beyond the private gains to be had in litigation. In addition to its important notice function, the definiteness requirement places the burden of drafting clear claims on the party in the best position to avoid ambiguity: the patent applicant. It is the applicant who is best situated to understand and describe the scope of the invention. See Markman, 517 U.S. at It is only fair to place the obligations of defining the claim on the applicant, as well as any attendant consequences of indefinite claiming. Finally, by placing the burden of clarity on the patent applicant, courts are relieved from the duty of ascertaining the exact invention of the patentee by inference and conjecture, derived from a laborious examination of previous inventions, and a comparison thereof with that claimed by him. Keystone Bridge Co. v. Phoenix Iron Co., 95 U.S. 274, 278 (1877). The definiteness requirement thus conserves judicial resources, both by relieving courts of the burden of trying to construe the most ambiguous claims and by ensuring that parties need not wait for a judicial decision to know what has been claimed and what remains open to innovation. II. THE FEDERAL CIRCUIT S STANDARD DEVIATES FROM THE STATUTORY REQUIREMENTS AND THIS COURT S PRECEDENT Despite this Court s emphasis on clarity in claim drafting and notice to skilled artisans, the Federal Circuit in recent years has embraced a test that runs afoul of those requirements. The Federal Circuit applies

20 11 what has become known as the insolubly ambiguous or amenable-to-construction standard. Exxon Research & Eng g Co. v. United States, 265 F.3d 1371, 1375 (Fed. Cir. 2001). Under this standard and various related formulations, the Federal Circuit asks only that the claims be amenable to construction, however difficult that task may be. Id. Only [i]f a claim is insolubly ambiguous, and no narrowing construction can properly be adopted, will the Federal Circuit hold the claims indefinite. Id. (emphasis added). The Federal Circuit s test for indefiniteness is thus met whenever the meaning of the claim is discernible to a court, even though the task may be formidable and the conclusion may be one over which reasonable people will disagree. Id.; see also Hearing Components, Inc. v. Shure Inc., 600 F.3d 1357, 1366 (Fed. Cir. 2010) (claim is definite so long as it can be given any reasonable meaning ). In practice, the Federal Circuit s standard makes it extremely difficult to invalidate indefinite claims. As one scholar has noted, The Federal Circuit s permissive posture towards the definiteness standard further undermines the public notice of patent claims. [I]n recent years the Federal Circuit upheld a claim calling for fibers that are substantially completely wetted over a definiteness challenge. 4 A claim directed towards treating a catalyst for a period sufficient to increase substantially the initial catalyst activity was like- 4 LNP Eng g Plastics, Inc. v. Miller Waste Mills, Inc., 275 F.3d 1347 (Fed. Cir. 2001).

21 12 wise confirmed. 5 [Another] example was a claim reciting concrete hardened sufficiently to allow cutting by a... saw, while still producing an acceptable finish, which also withstood scrutiny for indefiniteness. 6 Thomas, Claim Re-Construction: The Doctrine of Equivalents in the Post-Markman Era, 87 J. Pat. & Trademark Off. Soc y 781, 792 (2005). Other examples abound. In Dow Chemical Co. v. NOVA Chemicals Corp., 458 F. App x 910, 918 (Fed. Cir. 2012), the issue of infringement turned on whether a coefficient calculated based on the slope of a particular curve was greater than or equal to 1.3. Id. at 918. The coefficient was a new construct, not previously known in the art, id., but the patents-in-suit lacked two pieces of information essential to understanding the claims. First, although the patents stated that Figure 1 would depict where on the curve the slope was to be measured, the figure was entirely missing from the patent. Id. ( the patents in suit do not, for whatever reason, include the promised drawing ). Second, the patents never specified the units in which the value of 1.3 was to be calculated, even though the same inputs could yield an infringing value when calculated in English units and a non-infringing value when calculated in metric units. Id. at 920 ( It is true that the patents in suit do not specify any particular unit for the SHC coefficient. ). 5 Exxon Research & Eng g Co. v. United States, 265 F.3d 1371 (Fed. Cir. 2001). 6 Chiuminatta Concrete Concepts, Inc. v. Cardinal Indus., Inc., 145 F.3d 1303 (Fed. Cir. 1998).

22 13 As a result of these shortcomings, even the patent owner s own engineers and a named inventor could not figure out from the patent how to carry out the calculation in the claims. See Dow Chem. Co. v. NOVA Chems. Corp. (Canada), 629 F. Supp. 2d 397, 407 (D. Del. 2009) ( NOVA has elicited testimony from numerous Dow engineers who, after reviewing the patents-insuit, expressed an inability to calculate the slope of strain hardening. A named inventor on the patents-insuit was even unable to explain how to carry out this calculation after reviewing the relevant portions of the specification. (citations omitted)). The Federal Circuit nonetheless permitted bare expert testimony to fill the gaps in the patent and, under its permissive standard, held that the claims satisfied the requirements of 112, 2. 7 Other ambiguous claims have also survived review under the Federal Circuit s standard. In Enzo Biochem, Inc. v. Applera Corp., 599 F.3d 1325 (Fed. Cir. 2010), the key issue was the definition of a linkage group, which the claims defined only functionally as a linkage group that does not substantially interfere with nucleotide detection, or with hybridization. Id. at The district court held that the claim language substantially interfere was indefinite because [t]he specifications neither set forth how one would gauge substantial interference, nor delimit the threshold at which interference with the procedure prevents [the claimed] method from being implemented. Id. at 7 See Joint App x 2518, Dow Chem. Co. v. NOVA Chems. Corp., No (Fed. Cir.) ( Q. There are no documents that [the jury] can rely on to support your testimony that a person of ordinary skill would have used the maximum slope; correct? A. That s correct. ).

23 The Federal Circuit reversed, noting that examples of possible linkage groups in the specification provided at least some guidance as to how much interference will be tolerated. Id. at This minimal direction at least some guidance was sufficient for the Federal Circuit s lenient framework even though it left potential infringers with no way to know whether they had infringed short of extensive testing, a process that would itself lead inexorably to infringement. In Fisher-Price, Inc. v. Graco Children s Products, Inc., 154 F. App x 903, 906 (Fed. Cir. 2005), the Federal Circuit held that a disputed term was not indefinite because it could be construed. The court pointed out, two very plausible constructions already have emerged, both from the patent holder. Id. at 907. Those two constructions were equally plausible but materially different. Yet, under the Federal Circuit s amenable to construction standard, the presence of two equally plausible constructions counted as an argument against indefiniteness because it showed that the claims could be construed one way or the other in the end. As these cases illustrate, the Federal Circuit s amenable-to-construction formulation is satisfied in all but the most extreme cases, when a patentee is unable to develop litigation-inspired testimony or provide external evidence that will support its preferred construction. As a result, skilled artisans and the public at large are left to guess about the meaning of vague and ambiguous claims until long after they must make decisions regarding what activities and investments to pursue.

24 15 III. THE FEDERAL CIRCUIT S STANDARD STIFLES BUSINESS AND INNOVATION A. The Federal Circuit s Standard Encourages Ambiguity In Claim Drafting The Federal Circuit s indefiniteness standard promotes vague and ambiguous claims by allowing patentees to reap the rewards of their own failure to clearly communicate the scope of their claims without a serious risk that the claims will be deemed indefinite. See Judge Plager, The Federal Circuit as an Institution: On Uncertainty and Policy Levers, 43 Loy. L.A. L. Rev. 749, 759 (2010) ( One consequence of this particular reading of the statute is that it removes a significant impetus for clearer claim drafting, thus reinforcing the system s tolerance for uncertainty in claims. ). This result is the exact opposite of what Congress intended when it passed 112, 2. Ambiguous claims can confer a strategic advantage on patentees because uncertainties in claim scope increase a patentee s ability to tailor the reach of the claims to future activities and technological developments. Mullally, Legal (Un)certainty, Legal Process, and Patent Law, 43 Loy. L.A. L. Rev. 1109, (2010) ( [P]atent drafters often seek to avoid tying the claims to a particular meaning because to do so would limit the patentee s options when asserting the patent. ). Ambiguity also allows patentees more room to maneuver once litigation has started, making it harder to dismiss infringement suits and increasing the pressure to settle in order to avoid the expense of prolonged litigation. Perhaps unsurprisingly, manuals designed to assist patent drafters specifically counsel drafting the broadest claims possible. See Mullally, supra, at

25 16 (quoting Slusky, Invention Analysis and Claiming: A Patent Lawyer s Guide (2007)). Although breadth is not always the same as indefiniteness, this impetus to capture as much as possible and retain maximum flexibility often does result in imprecise claims. See Judge Plager, Challenges for Intellectual Property Law in the Twenty-First Century: Indeterminacy and Other Problems, 2001 U. Ill. L. Rev. 69, 71 (2001) ( [T]he inventor wants to have the claims stated as broadly as possible to cover not only the actual invention but also all possible future variants. Thus, lawyers who draft patent specifications for their clients tend to write claims in the broadest and most general terms possible, sometimes to the point at which it is virtually impossible to grasp what is actually claimed. ). And ambiguity works. Patentees can already exploit[] the high cost to defend complex litigation [by] extract[ing] a nuisance value settlement from an accused infringer. Eon-Net LP v. Flagstar Bancorp, 653 F.3d 1314, 1327 (Fed. Cir. 2011). Ambiguous claims can increase this settlement pressure by increasing the cost of claim construction and making it more difficult to terminate cases early with non-infringement arguments that must be measured against malleable claims. Unless and until the Federal Circuit s standard is corrected, ambiguous claims will remain a feature of the patent system, sowing uncertainty, stifling competition and innovation, and exacting a substantial cost on the national economy and the public. B. The Uncertainty Created By The Federal Circuit s Standard Comes At Great Expense To Businesses And To The Public To successfully invest and innovate, businesses need a reasonable degree of certainty that their efforts

26 17 will not result in costly infringement suits that drain resources and distract from more productive activities. The Federal Circuit s definiteness standard fails to provide that assurance. Rather, it increases uncertainty by tolerating unclear claims as long as some meaning can be attributed to them by a court, often years after the fact. In the face of such uncertainty, some businesses choose to innovate less rather than risk expensive infringement litigation. See Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, (2002) ( [C]larity [as to the boundaries of a patentee s property right] is essential to promote progress, because it enables efficient investment in innovation. ). Moreover, those who do enter the field must divert their research and development budgets to the everrising costs of litigating indefinite claims. The consequences of these costs to both business and the public are significant: fewer competitors and less dynamism in emerging fields; substantial sums siphoned from research and development; and diminished economic and scientific progress. 1. The Federal Circuit s acceptance of vague and ambiguous claims reduces total investment in innovation This Court has long recognized that sufficiently high litigation risk discourages enterprise and experimentation only a little less than unequivocal foreclosure of the field. Markman, 517 U.S. at 390 (quoting United Carbon, 317 U.S. at 236). The definiteness requirement serves to combat that risk by allowing the public to ascertain what is still open to them, and what is not. McClain v. Ortmayer, 141 U.S. 419, 424 (1891); see also Oakley, Inc. v. Sunglass Hut Int l, 316

27 18 F.3d 1331, 1340 (Fed. Cir. 2003). When this requirement is routinely unenforced as it is under the Federal Circuit s standard otherwise viable innovation becomes too costly. When the risk of expensive litigation is uncertain, companies rationally will choose to invest less, or even not at all. Some companies may forgo investment with respect to a given product or project due to high levels of patent uncertainty. See, e.g., Bessen & Meurer, Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators At Risk 219 (2008) ( Our empirical analysis has shown that poor patent notice has reduced the incentives to invent. ); see also Jaffe & Lerner, Innovation and Its Discontents 15 (2004) ( [S]mall firms may reduce or alter their investment in R&D. Evidence from surveys and practitioner accounts suggests that the time and expense of intellectual property litigation is a major consideration when deciding whether to pursue an innovation. ); FTC, The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition (Mar. 2011). Others may stay out of the market entirely. See, e.g., Sichelman & Graham, Patenting by Entrepreneurs: An Empirical Study, 17 Mich. Telecomm. & Tech. L. Rev. 111, 126 (2010) ( [I]t may be that incumbents can strategically exploit weak patents to prevent competition from potential entrants. ). In both scenarios, the Federal Circuit s acceptance of ambiguous patent claims drives down overall investment in innovation and the economic growth that it spurs. The prohibitive uncertainty created by the Federal Circuit s standard also depresses competition. As noted, unclear claims create a zone of uncertainty that causes potential competitors to steer well clear, effectively expanding ambiguous claims beyond their proper

28 19 scope. See Mullally, supra, at ( Patentees can thus use uncertainty in their claim language to their advantage in potentially securing a sphere of protection around their inventions that may be wider than warranted. ); see also Landes & Posner, The Economic Structure of Intellectual Property Law 324 (2003) ( [A]n indefinite claim would tend to enlarge the practical scope of the patent beyond its lawful bounds by imposing legal risks on competitors, who would be buying an infringement suit if they mistook those bounds because the patent claim was unclear. ). The suboptimal level of competition that results is antithetical to the goals of the patent system, which seeks to reward innovation without unnecessarily stifling competition. See Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 63 (1998) ( [T]he interest in avoiding monopolies that unnecessarily stifle competition has been a feature of the federal patent laws since their inception. ); Bonito Boats, 489 U.S. at 146 ( [T]he federal patent laws have embodied a careful balance between the need to promote innovation and the recognition that imitation and refinement through imitation are both necessary to invention itself and the very lifeblood of a competitive economy. ). 2. The Federal Circuit s acceptance of ambiguous claims taxes innovators with massive litigation costs For those who choose to innovate in the zone of uncertainty, the Federal Circuit s standard breeds lengthy, costly, and ultimately wasteful litigation over unclear claims. These actions act as a massive tax on innovators, while providing little social benefit.

29 20 Businesses spend huge sums on intellectual property litigation each year. One study estimates that where under $1 million is at stake, suits cost $650,000 through trial; where between $1 and $25 million is at stake, suits cost an average of $2.5 million through trial; and where over $25 million is at stake, suits cost at least $5 million to take to trial. American Intellectual Property Law Association, Report of the Economic Survey 2011, at 35 (July 2011). The Federal Circuit s indefiniteness standard contributes to this extraordinary cost by making it difficult to invalidate vague and ambiguous claims. These costly litigations require innovators to spend funds litigating the bounds of unclear patent claims, rather than researching and developing new technologies. They also diminish the value of innovators businesses. When a corporation becomes a defendant in a patent litigation, the market notices. See, e.g., Executive Office of the President, Patent Assertion and U.S. Innovation 9-10 (June 2013) (calculating the total lost wealth due to certain infringement suits from 2007 to 2011 at $300 billion). This, too, is a tax on innovators, reducing their ability to raise capital and to bring new goods and technologies to market. The impact of unclear claims is felt well beyond the individual businesses affected. It also harms the public by impeding the technological and economic progress that creates jobs and enhances quality of life. IV. THIS COURT SHOULD REQUIRE THAT PATENTS PRO- VIDE CLEAR NOTICE OF CLAIM SCOPE This Court should reject the Federal Circuit s indefiniteness standard and replace it with a standard that requires clear notice of claim scope. The clear notice standard is consistent with years of precedent and

30 21 would align the definiteness test with the overarching purpose of 112, 2. This Court has used varying formulations over the years to describe the definiteness requirement, but the common theme in all the cases is that clarity and notice are the lynchpins of the requirement. See United Carbon, 317 U.S. at 236 ( The statutory requirement of particularity and distinctness in claims is met only when they clearly distinguish what is claimed from what went before in the art and clearly circumscribe what is foreclosed from future enterprise. ); Universal Oil, 322 U.S. at 484 ( precision of disclosure is essential to warn the industry concerned of the precise scope of the monopoly asserted ); Permutit Co. v. Graver Corp., 284 U.S. 52, 60 (1931) ( The statute requires the patentee to inform the public during the life of the patent of the limits of the monopoly asserted, so that it may be known which features may be safely used or manufactured without a license and which may not. ); McClain, 141 U.S. at 424 ( The object of the patent law in requiring the patentee [to distinctly claim his invention] is to apprise the public of what is still open to them. ); Merrill, 94 U.S. at 573 ( The public should not be deprived of rights supposed to belong to it, without being clearly told what it is that limits these rights. ). This Court should reaffirm that the touchstone of definiteness is clear notice. Under this standard, the question would not be whether claims are amenable to some construction. Rather, as the statute says, claims would be required, to particularly point[] out and distinctly claim[] their subject matter, thereby providing competitors and the public with clear guidance on what is and is not prohibited.

31 22 The determination whether any particular claim fails to provide clear notice is necessarily case-specific, but there are a number of common principles and warning signs that indicate that a claim has not provided sufficient guidance: First, claims must particularly describe what is claimed and point out the limitations of those claims, so that it is clear both what the claimed invention is and what it is not. Second, a person of ordinary skill should be able to readily ascertain the meaning of a claim by looking at the claims and the specification. When that meaning cannot be determined without resort to more remote sources, the notice function of the claims is defeated and the burden of searching for meaning is improperly placed on the public rather than on the patentee who is in the best position to clarify its claims. This emphasis on providing clarity within the four corners of the patent, as read by a person of ordinary skill in the art, would bring the interpretation of 112, 2 back into alignment with the rest of 112. This Court has long noted the close relationship between the written description and enablement requirements of 112, 1 and the definiteness requirement of 112, 2. See Universal Oil, 322 U.S. at 484 ( [T]he quid pro quo is disclosure of a process or device in sufficient detail to enable one skilled in the art to practice the invention once the period of the monopoly has expired; and the same precision of disclosure is likewise essential to warn the industry concerned of the precise scope of the monopoly asserted. ); see also Markman, 517 U.S. at 373. In the context of the written description requirement, the en banc Federal Circuit has held that

32 23 the test requires an objective inquiry into the four corners of the specification from the perspective of a person of ordinary skill in the art. Based on that inquiry, the specification must describe an invention understandable to that skilled artisan and show that the inventor actually invented the invention claimed. Ariad Pharm., Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1351 (Fed. Cir. 2010) (emphasis added). Similarly, the definiteness requirement should require[] an objective inquiry into the four corners of the specification from the perspective of a person of ordinary skill in the art. In particular, unsupported assertions by an expert that claims are understandable to one of ordinary skill should not be sufficient to defeat a definiteness challenge. Such expert testimony is too easily manipulated and, by definition, is not available to competitors, innovators, and members of the public at the time they make decisions about how to structure their primary conduct. As the Federal Circuit itself has recognized, undue reliance on unsupported expert testimony is unfair to competitors who must be able to rely on the patent documents themselves, without consideration of expert opinion that then does not even exist, in ascertaining the scope of a patentee s right to exclude. Southwall Techs., Inc. v. Cardinal IG Co., 54 F.3d 1570, 1578 (Fed. Cir. 1995); see Phillips v. AWH Corp., 415 F.3d 1303, 1318 (Fed. Cir. 2005) ( [C]onclusory, unsupported assertions by experts as to the definition of a claim term are not useful to a court. ). Instead, to the extent a patentee relies on evidence to establish the perspective of a person of ordinary skill, it must be clearly grounded in the prior art and measured against the public notice function of patent claims.

33 24 Third, courts should take into account the difficulty of claim construction. Claim construction is an unavoidable part of patent litigation, and not every claim construction dispute should lead to a finding of indefiniteness. But freed from the constraints of the Federal Circuit s current standard and guided by the requirement of clear notice, courts are well suited to distinguish between ordinary disputes over the meaning of claims on the one hand, and genuine ambiguity on the other. When construing a claim requires undue effort, the correct construction is genuinely doubtful, or there is substantial and reasonable disagreement among persons of ordinary skill as to the claim s meaning, it indicates that the claims did not clearly communicate their scope to skilled artisans. Fourth, when a patent uses vague terms with no established meaning in the art, courts should insist that the specification clarify the meaning of those terms. Technical terminology is to be expected in patents. But too often, patents use newly minted jargon or barely comprehensible combinations of words with no ordinary meaning to obscure the precise scope of claims and thereby preserve maximum flexibility to stretch those claims in the future. This practice should not be tolerated. When a patent uses unintelligible terms, the solution is not to force a meaning onto the term where none is apparent, as the Federal Circuit s current standard encourages. Rather, patentees should be given an incentive to clarify those terms at the outset by requiring them to bear the risk that a lack of comprehension will lead to invalidation. Fifth, courts should be deeply suspicious of subjective terms in patent claims. See, e.g., Datamize, LLC v. Plumtree Software, Inc., 417 F.3d 1342, 1345 (Fed. Cir. 2005) (claimed invention with an aesthetically pleasing

34 25 look and feel ). Claim scope should not depend on the subjective opinion of a particular individual practicing the claim or alleging infringement. Sixth, when patents use terms of degree, the specification must supply a standard for measuring that degree. See, e.g., Hearing Components, 600 F.3d at Preferably, it should be a standard recognized in the art. If not, even greater specificity in the patent should be required. Seventh, when claims refer to measurements or equations, it should be clear from the specification how the measurement should be taken and what units are being used. There is no excuse for the public to have to guess whether 2.7 means feet, inches, meters, or centimeters. See, e.g., Dow Chem. Co., 458 F. App x at 920. Nor should one have to search beyond the patent to determine this information. These principles do not exhaust what it means to provide clear notice, but they would go a long way toward achieving a more balanced application of 112, 2. By hinging the definiteness requirement on the degree of notice the claims provide, a clear notice standard aligns the application of the definiteness requirement with its underlying purposes. Innovators will be able to ascertain the bounds of a patent, and assess with some degree of certainty what remains open to them. The patentee who was in the best position to prevent any shortcomings in his claiming will bear the attendant consequences if his claiming is ambiguous. A clear notice standard therefore will properly allocate the risks inherent in innovation, which is itself a chief aim of 112 s notice function. This case presents this Court with a timely opportunity to reaffirm that the touchstone of the definite-

35 26 ness requirement is clear notice. By adopting a practical, workable framework that emphasizes the importance of clear notice this Court will reinvigorate the definiteness requirement. That in turn will have a profound positive impact on business innovators and the public alike. CONCLUSION The judgment of the court of appeals should be vacated. Respectfully submitted. DONALD R. DUNNER* DARREL C. KARL MARK J. FELDSTEIN RONALD A. BLEEKER FINNEGAN, HENDERSON, FARABOW, GARRETT & DUNNER, LLP 901 New York Ave., NW Washington, DC H. WOODRUFF TURNER* K&L GATES LLP 210 Sixth Avenue Pittsburgh, PA WILLIAM C. MITCHELL* GARY F. MATZ NOVA CHEMICALS INC Coraopolis Heights Rd. Pittsburgh, PA * Counsel for NOVA Chemicals Inc. MARCH 2014 SETH P. WAXMAN Counsel of Record THOMAS G. SAUNDERS CHRISTINA MANFREDI MCKINLEY WILMER CUTLER PICKERING HALE AND DORR LLP 1875 Pennsylvania Ave., NW Washington, DC (202) seth.waxman@wilmerhale.com ARI SAVITZKY WILMER CUTLER PICKERING HALE AND DORR LLP 7 World Trade Center 250 Greenwich Street New York, NY 10007