Selected Recent Developments in Patent Law

Transcription

1 Selected Recent Developments in Patent Law By Gale R. Peterson, Cox Smith Matthews, San Antonio, Texas IPO ANNUAL MEETING 2010 September 12 14, Atlanta, Georgia

2 Table of Contents Page I. Obviousness/Non-Obviousness A. Presumption of Validity: Burden of Proof... 1 B. The Obviousness/Non-Obviousness Analysis Post KSR Predictable Result... 2 a) KSR - [A] combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results... 2 b) Although Predictability is a Touchstone of Obviousness, the predictable result Discussed in KSR Refers Not Only to the Expectation That Prior Art Elements Are Capable of Being Physically Combined, But Also That the Combination Would Have Worked For Its Intended Purpose: An Inference of Nonobviousness is Especially Strong Where the Prior Art s Teachings Undermine the Very Reason Being Proffered As To Why a Person of Ordinary Skill Would Have Combined the Known Elements... 4 c) KSR - whether the improvement is more than the predictable use of prior-art elements according to their established functions Claims Obvious Over Multiple Embodiments of Single Reference: Motivation Found Based on Expert Testimony That Circuit Designers Routinely Mix and Match Circuit Topologies and Elements: District Court Did Not Abuse Its Discretion in Appointing a Rule 706 Expert... 8 d) Rocket Science is Not Necessary for Invention or Maybe It Is: Judge Rader i

3 Castigates Panel Majority for Employing an Alleged Bias Against Non-Technical Arts Motivation a) It Remains Appropriate Post-KSR For Courts to determine whether there was an apparent reason to combine the known elements in the fashion claimed by the patent at issue b) Motivation to Add Known HTML Content Location Tags May Come From Market Pressure to Bring Features of Non-Web Based Programs to the Web c) Although an Explicit Teaching, Suggestion or Motivation to Combine Prior Art References is Not Required, It May Nevertheless be important to identify a reason that would have prompted a person of ordinary skill in the relevant field to combine the elements in the way the claimed new invention does Obvious To Try a) Choosing Among Known Options For an Acid-Sensitive Drug Constitutes Obvious to Try Common Sense a) While an Analysis of Obviousness Depends on Evidence That Supports the Required Graham Findings, That Analysis May Include Recourse to Logic, Judgment and Common Sense That do Not Necessarily Require Explication in Any Reference or Expert Opinion: On Summary Judgment, to Invoke Common Sense or Other Basis For Extrapolating From Prior Art to a Conclusion of Obviousness, a District Court Must Articulate Its Reasoning With Sufficient Clarity For Review C. The Graham Findings Scope and Content of the Prior Art ii

4 a) Claims in Prior Art Patent, and the Doctrine of Claim Differentiation, May be Used to Determine Scope of Disclosure b) Board s Erroneous Interpretation of Reference Cannot Be Harmless Error c) Genuine Disputes Over The Scope and Content of the Prior Art May Preclude Summary Judgment: Twice Signing a Party s Proposed Findings of Fact and Conclusions of Law Without Change, and Being Twice Reversed Warrants Reassigning the Case to a Different District Judge Differences Between the Prior Art and the Claimed Invention a) Claim Construction i. Claim Construction May Result in Genuine Issues of Material Fact Precluding Summary Judgment ii. Claim Construction Avoids Finding of Obviousness: Court Splits on What the Trial Court s Actual Claim Construction Was b) Post-KSR Relatively Simple Mechanical Inventions May Be Patentable When Prior Art Teaches Away From the Claimed Invention D. Obviousness Analysis of Design Patents Durling Analysis, i.e., Finding a Primary Reference Having design characteristics of which are basically the same as the claimed design, and Secondary References so related [to the primary reference] that the appearance of certain ornamental features in one would suggest the application of those features to the other Continues to Control E. Secondary Considerations Industry Acceptance iii

5 a) Evidence of Industry Acceptance, and Copying Coupled With the Accused Infringer s Touting of Advantages of the Invention is Inconsistent With Allegations of Obviousness Commercial Success a) An Invention May Be Commercially Successful Even Though It Was Never Sold by the Patentee II. Double Patenting A. Terminal Disclaimers Terminal Disclaimers Must be Filed Before the Reference Patent Expires B. Safe Harbor The Safe Harbor of 121 Applies to divisionals of divisionals and Applies Even Though No Restriction Requirement Was Made in the Immediate Parent Application, i.e., a Restriction Requirement in a Grandparent Application is Sufficient The Safe Harbor of 121 is Limited to Divisional Applications Denomiated as Such And Does Not Extend to Continuations III. Legal Ethics And Inequitable Conduct A. Materiality Arguments Made to the EPO That Arguably Contradict Arguments Made to the USPTO Are Material Federal Circuit Evidences Deep Divide Among Judges on Inequitable Conduct B. Intent Inferred a) Fabricating Evidence May Furnish Grounds for Finding an Intent to Deceive iv

6 2. Not Inferred a) Disclosing Test Data on Closest Structurally Similar Compounds as Requested by Examiner While Not Disclosing Test Data on Other Structurally Similar Compounds Fails to Meet Thresholds of Either Materiality or Intent to Deceive: Evidence of Materiality and Intent Are Only Weighed After Threshold Showings Have Been Made b) Intent Cannot be Inferred Simply From Non- Disclosure Even If The Reference is Highly Material c) Intent to Deceive is Generally Not Inferable on Summary Judgment C. Scope of Individuals Bearing Duty of Disclosure Under Rule Background substantively involved in the preparation or prosecution of the application a) In Rule 56(c)(3), substantively involved Means That the Involvement Relates to the Content of the Application or Decisions Related Thereto, and That the Involvement is not Wholly Administrative or Secretarial in Nature D. Pleading Inequitable Conduct To Plead the Circumstances of Inequitable Conduct With the Requisite Particularity Under Rule 9(b), the Pleading Must Identify the Specific Who, What, When, Where, and How of the Material Misrepresentation or Omission Committed Before the PTO; Although Knowledge and Intent May be Averred Generally, a Pleading of Inequitable Conduct Must Include Sufficient Allegations of Underlying Facts From Which a Court May Reasonably Infer That a Specific Individual (1) Knew of the Withheld Material Information or of the Falsity of the Material v

7 Misrepresentation, and (2) Withheld of Misrepresented This Information With a Specific Intent to Deceive the PTO vi

8 Selected Recent Developments in Patent Law By Gale R. Peterson, Cox Smith Matthews, San Antonio, Texas I. OBVIOUSNESS/NON-OBVIOUSNESS 103 A. Presumption of Validity: Burden of Proof Because of the presumption of validity under 282, the burden of persuasion for showing obviousness rests on the challenger, and the proof necessary to overcome that presumption of validity must meet a clear and convincing standard. 1 A decision that a challenger has not carried the burden of persuasion, in logic and in law, can rest only on the evidence submitted by the party attacking validity. That is the natural consequence of the presumption of validity. A decision that a challenger has carried the burden of persuasion on the issue of obviousness, on the other hand, must rest on all of the evidence of obviousness/nonobviousness presented both affirmatively and in rebuttal. Such evidence therefore must be balanced. The Federal Circuit has frequently pointed out that the presumption of validity is always in place, and the burden of persuasion continually remains with the challenger. While in practice it may be easier for one to meet the clear and convincing standard if art more pertinent than that cited to the PTO is discovered, the standard is never lowered to the 1 The presumption has been referred to in terms of a deference to administrative action. Thus, it has been held that a party who challenges the validity of a patent claim, and who fails to offer prior art more pertinent than that considered by the PTO, has the added burden on appeal of overcoming the deference that is due to the PTO as a qualified government agency presumed to have properly done its job. Kloster Speedsteel AB v. Crucible Inc., 793 F.2d 1565, 1571 (Fed. Cir.), modified on rehearing, 231 U.S.P.Q. 160 (Fed. Cir. 1986). Am. Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350 (Fed. Cir.) cert. denied, 469 U.S. 821 (1984). 1

9 preponderance of the evidence standard. 2 In Magnivision, Inc. v. Bonneau Co., 3 for example, the Federal Circuit emphasized that [t]he presumption [of validity] operates by placing the burden of proving validity on the person attacking the patent, who must prove invalidity by clear and convincing evidence. The presumption does not dissolve and the burden of proof does not change during the trial; rather, the evidence presented by the challenger must be of such quality and weight as to establish invalidity despite the presumption. 4 B. The Obviousness/Non-Obviousness Analysis Post KSR 1. Predictable Result a) KSR - [A] combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results In Ecolab, Inc. v. FMC Corp., 5 Ecolab and FMC sold chemical products used by beef and poultry processors to reduce pathogens, such as E. coli and salmonella, on uncooked beef and poultry. Those products included an antimicrobial compound peracetic acid ( PAA ), which the food processing and food service industries had used as a surface sanitizer. Ecolab and FMC had both obtained patents drawn to the use of PAA as a sanitizer in beef and poultry processing. Ecolab filed suit alleging that FMC had infringed three of its patents. FMC counterclaimed for infringement of one of its patents. The jury found that (1) several claims of Ecolab s asserted patents were invalid as anticipated or obvious, (2) FMC willfully infringed valid claims of two of Ecolab s patents, (3) Ecolab infringed valid claims of FMC s patent, and (4) neither party induced infringement of any claims. The jury awarded reasonable royalty damages, and the district court entered judgment on the jury s verdict. Both parties filed post-trial motions for JMOL etc., which the district court denied. One of the post-trial motions was FMC s motion for JMOL that claims of one of Ecolab s patents were invalid as having been obvious. The jury had concluded that those claims were not invalid and were infringed. The Federal Circuit concluded that the district court should have granted FMC s motion. 2 Medtronic Inc. v. Intermedics, Inc., 799 F.2d 734 (Fed. Cir. 1986). See also Applied Materials Inc. v. Advanced Semiconductor Materials, 98 F.3d 1563 (Fed. Cir. 1996), cert. denied, 117 S. Ct (1997)( The presentation at trial of additional evidence that was not before the PTO does not change the presumption of validity or the standard of proof, although the burden may be more or less easily carried because of the additional evidence. ) F.3d 956 (Fed. Cir. 1997), cert. denied, 522 U.S (1998)(Opinion by Circuit Judge Newman, joined by Circuit Judges Rich and Clevenger). 4 Id. at F.3d 1335 (Fed. Cir. 2009)(Opinion by Circuit Judge Gajarsa, joined by Circuit Judges Rader and Dyk)(appeals from the United States District Court for the District of Minnesota in case no. 05-CV-831, Judge James M. Rosenbaum). 2

10 Claim 25 was drawn to a method of treating a meat product to reduce a microbial population in the meat product, wherein the method comprises steps for treating meat, such as poultry, with a PAA composition under specified conditions. Claims were dependent on claim 25. The claims called for specified temperature, spray pressure, and contact time limitations. A prior art FMC patent disclosed the temperature and contact time limitations, but did not disclose the claimed spray pressure, namely at least 50 psi. Ecolab s expert, however, conceded that the advantages of using a pressure greater than 50 psi were known in the art, i.e., ensuring sufficient contact between the antimicrobial solution and the meat to vigorously wash the meat surface. A secondary reference the Bender patent taught using a different solution, but also taught using a pressure of 20 to 150 psi. Ecolab s expert agreed that one skilled in the art would know how to adjust the process parameters for particular solutions. According to the court, the question was whether it would have been obvious to combine the high pressure parameter disclosed in the Bender patent with the PAA methods disclosed in FMC s 676 patent. 6 The Federal Circuit answered yes. The Federal Circuit reasoned that (1) there was a reason to combine the reference teachings because the advantages of spraying antimicrobial solutions onto meat at high pressures was known, and methods for sanitizing meat with PAA were known, (2) a person of ordinary skill in the art would have known how to make the combination, i.e., he/she would have used the high pressure sprayer disclosed in the Bender reference, and (3) the claims are invalid as obvious because the combination of the high pressure treatment disclosed in the Bender patent with the methods disclosed in FMC s patent is merely the combination of familiar elements to yield predictable results, citing KSR F.3d at F.3d at

11 b) Although Predictability is a Touchstone of Obviousness, the predictable result Discussed in KSR Refers Not Only to the Expectation That Prior Art Elements Are Capable of Being Physically Combined, But Also That the Combination Would Have Worked For Its Intended Purpose: An Inference of Nonobviousness is Especially Strong Where the Prior Art s Teachings Undermine the Very Reason Being Proffered As To Why a Person of Ordinary Skill Would Have Combined the Known Elements In DePuy Spine, Inc. v. Medtronic Sofamor Danek, Inc. (DePuy Spine II), 8 the obviousness issue arose in the context of an ensnarement defense to a charge of infringement under the doctrine of equivalents, i.e., infringement under the doctrine of equivalents would ensnare the prior art the assertion being that a hypothetical claim 9 drafted to cover the accused device under the doctrine of equivalents would be invalid under 103 as having been obvious. The Federal Circuit held that (1) the ensnarement defense presents an issue of law for the court to decide, and (2) here, the hypothetical claim would not have been invalid over the prior art. The case is potentially important because it is the first case after KSR involving a primarily mechanical device in which the Federal Circuit found that a claim would not have been obvious in light of the prior art. The subject matter was polyaxial pedicle screws used in spinal surgeries, and DePuy asserted that Medtronic s Vertex model infringed. In a first appeal in DePuy I, 10 the Federal Circuit affirmed the district court s grant of summary judgment of no literal infringement, but reversed and remanded the summary judgment of non-infringement under the doctrine of equivalents. The Federal Circuit held that the Vertex model, which had a receiver member with an inner hollow space that was conical in shape did not literally infringe DePuy s claim calling for a spherically-shaped portion, but that there was an unresolved question of fact whether the conical shape was insubstantially different from the claimed spherically-shaped portion. On remand, a jury concluded that there was infringement under the doctrine of equivalents, and awarded DePuy a total of $ million in damages consisting of $ million in lost profits on pedicle screws and $ 77.2 million in lost profits on pull-through products. The district court chose to decide the ensnarement issue as a matter of law. The district court held that DePuy s claim, revised as a hypothetical F.3d 1314 (Fed. Cir. 2009)(Opinion by Circuit Judge Linn, joined by Circuit Judges Newman and Bryson)(appeals from the United States District Court for the District of Massachusetts in case no. 01-CV , Senior Judge Edward F. Harrington). 9 See Wilson Sporting Goods Co. v. David Geoffrey & Assoc., 904 F.2d 677, 683 (Fed. Cir. 1990), overruled in part on other grounds, Cardinal Chem. Co. v. Morton Int l, Inc., 508 U.S. 83, 92 n.12 (1993), for a discussion of hypothetical claims. See also Interactive Pictures Corp. v. Infinite Pictures, Inc., 274 F.3d 1371, 1375 (Fed. Cir. 2001). 10 DePuy Spine, Inc. v. Medtronic Sofamor Danek, Inc. ( DePuy Spine I ), 469 F.3d 1005, 1026 (Fed. Cir. 2006). 4

12 claim per the doctrine of equivalents, did not ensnare the prior art. On appeal, the Federal Circuit agreed. The patented device included a pedicle screw 1 having a screw head 4 that was surrounded by a spherically-shaped portion 9 of receiver member 5: Medtronic argued that the combination of a patent to Puno and a patent to Anderson would have rendered obvious a hypothetical version of claim 1 of DePuy s patent, in which the phrase conically-shaped was substituted for the actual claim term spherically-shaped. The hypothetical claim was: Device for stabilizing spinal column segments, comprising a pedicle screw (1) having a threaded shaft portion (3) and a spherically-shaped head (4) at the end of said threaded shaft portion, a receiver member (5) flexibly connected to said head (4), said receiver member being provided with two holes for receiving a rod 916) [sic:(16)], a receiver chamber (7) being provided within said receiver member (5), the receiver chamber (7) having at one end thereof a bore (8) for passing the threaded shaft portion (3) therethrough and an inner hollow conically-shaped portion (9) for receiving the head (4) of said screw (1), an opening (10) being provided opposite said bore (8) for inserting said screw (1), said device further comprising a compression member (18) for exerting a force onto said head (4) such that said head is pressed against the hollow conically-shaped portion (9). (emphasis added) The Federal Circuit explained that [a] helpful first step in an ensnarement analysis is to construct a hypothetical claim that literally covers the accused device. 11 The parties agreed that hypothetical claim covered the accused Vertex model screws F.3d at The Federal Circuit has permitted the use of hypothetical claims in assessing infringement under the doctrine of equivalents. See Interactive Pictures, 274 F.3d at

13 The Federal Circuit explained that [n]ext, the district court must assess the prior art introduced by the accused infringer and determine whether the patentee has carried its burden of persuading the court that the hypothetical claim is patentable over the prior art. 12 According to the court, [u]ltimately, [i]f such a claim would be unpatentable under 35 U.S.C. 102 or 103, then the patentee has overreached, and the accused device is noninfringing as a matter of law. 13 Puno disclosed a polyaxial pedicle screw assembly that the parties agreed contained all of the elements of the hypothetical claim except for a compression member for pressing the screw head against the receiver member: In Puno, screw head 30 was separated from the receiver member (anchor seat 23) which produced, according to Puno, a shock absorber effect that allowed some motion between the anchor seat and vertebrae. According to Puno, that shock absorber effect prevent[s] direct transfer of load from the rod to the bone-screw interface prior to achieving bony fusion, thereby decreasing the chance of failure of the screw or the bone-screw interface. Medtronic argued that the compression member missing in Puno was found in Anderson. Anderson disclosed an external fracture immobilization splint for immobilizing long bones, such as arm or leg bones, with a swivel clamp that was capable of polyaxial movement until it is rigidly secured by a compression member: The compression member was sleeve 15 having a spherically-curved seat F.3d at 1325, citing Interactive Pictures, 274 F.3d at F.3d at 1325, quoting Interactive Pictures, 274 F.3d at

14 Interestingly, DePuy s expert was asked on cross-examination whether a person of ordinary skill in the art would have recognized that addition of Anderson s compression member to Puno s screw would have resulted in a rigidly-locked polyaxial pedicle screw covered by the hypothetical claim. DePuy s expert answered I think so. Medtronic argued that admission was alone sufficient to render the hypothetical claim to have been obvious. The Federal Circuit disagreed. The Federal Circuit explained that [a]lthough predictability is a touchstone of obviousness, the predictable result discussed in KSR refers not only to the expectation that prior art elements are capable of being physically combined, but also that the combination would have worked for its intended purpose. * * * As the Supreme Court explained, The combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results. * * * The opposite conclusion would follow, however, if the prior art indicated that the invention would not have worked for its intended purpose or otherwise taught away from the invention. * * * An inference of nonobviousness is especially strong where the prior art s teachings undermine the very reason being proffered as to why a person of ordinary skill would have combined the known elements. 14 Medtronic argued that motivation to combine the teachings of Puno and Anderson came from the goal of achieving a rigid pedicle screw. DePuy argued and the district court agreed that Puno taught away from a rigid screw because Puno taught that rigidity increased the likelihood that the screw would fail and thus the resulting device would have been inoperative for its intended purpose. The Federal Circuit agreed. The Federal Circuit reiterated that [a] reference may be said to teach away when a person of ordinary skill, upon reading the reference, would be discouraged from following the path set out in the reference, or would be led in a direction divergent from the path that was taken by the applicant. 15 On the other hand, the Federal Circuit noted, [a] reference does not teach away, however, if it merely expresses a general preference for an alternative invention but does not criticize, discredit, or otherwise discourage investigation into the invention claimed. 16 The Federal Circuit reasoned that [i]n this case, we agree with the district court that Puno does not merely express a general preference for pedicle screws having a shock absorber effect. Rather, Puno expresses concern for failure and states that the shock absorber feature decrease[s] the chance of failure of the screw or the bone-screw interface because it prevent[s] direct transfer of load from the rod to the bone-screw interface. 17 Medtronic urged that other reasons would have motivated one of ordinary skill in the art to overlook Puno s warning concerning screw failure, namely (1) the Federal Circuit s F.3d at F.3d at 1327, quoting Ricoh Co., Ltd. v. Quanta Computer Inc., 550 F.3d 1325, 1332 (Fed. Cir. 2008), in turn quoting In re Kahn, 441 F.3d 977, 990 (Fed. Cir. 2006) F.3d at 1327, quoting In re Fulton, 391 F.3d 1195, 1201 (Fed. Cir. 2004) F.3d at

15 opinion in a different case in which the Federal Circuit had construed operatively in Puno s claim 5 such that Puno s screws could be rigid, (2) another patent (the Harms patent) listing the same inventors as on DePuy s patent disclosing how screws could be tightened or loosened as desired, and (3) a third patent, that listed Puno as a co-inventor, and which taught a screw-and-rod system with an intermediate amount of rigidity. The Federal Circuit was not persuaded, concluding that (1) its prior construction of operatively did not specify any degree of rigidity, and did not overcome Puno s warning against increasing rigidity, (2) the Harms patent was silent on why one would have wanted various rigidity levels, and (3) the other Puno patent viewed low rigidity as an advantage and a high degree of rigidity as a disadvantage, thus bolstering the district court s finding that the prior art taught away from rigid pedicle screws. The Federal Circuit concluded that the district court correctly found that Puno, viewed against the backdrop of the collective teachings of the prior art, teaches away from a rigid pedicle screw encompassed by the hypothetical claim, such that a person of ordinary skill would have been deterred from combining Puno and Anderson in the manner that Medtronic proposes. 18 The Federal Circuit also found support for that conclusion in two secondary considerations, namely failure by others and copying. The district court had found that Medtronic had originally set out to produce a rigid pedicle screw and had initially decided on a design that used a rod, not a compression member, to exert pressure on the screw head. Medtronic engineers, according to the district court, were focused on making Puno s device more rigid. When DePuy s patent issued, however, according to the district court, Medtronic s engineers changed direction and decided to use a compression member, and that became the now accused Vertex model. The district court had inferred that Medtronic had copied the compression member from DePuy s patent. Medtronic argued that it had not copied the DePuy patent, but had tried to design around the spherically-shaped limitation to avoid infringement. However, the Federal Circuit noted that Medtronic does not allege that it independently conceived the idea of adding a compression member to a pedicle screw; indeed, Medtronic does not specifically deny copying the patent s compression member concept. Because the addition of a compression member to a pedicle screw is what Medtronic argues would have been obvious, we agree with the district court that Medtronic s initial attempt at making a rigid pedicle screw without a compression member, together with Medtronic s prompt adoption of the claimed feature soon after the patent issued, are relevant indicia of nonobviousness. 19 c) KSR - whether the improvement is more than the predictable use of prior-art elements according to their established functions Claims Obvious Over Multiple Embodiments of Single Reference: Motivation Found Based on Expert Testimony That F.3d at F.3d at

16 Circuit Designers Routinely Mix and Match Circuit Topologies and Elements: District Court Did Not Abuse Its Discretion in Appointing a Rule 706 Expert In Monolithic Power Systems, Inc. v. O2 Micro Int l, Ltd., 20 O2 Micro s patent-in-suit was drawn to power inverter circuitry for laptop computers. MPS filed a declaratory judgment action in the Northern District of California seeking judgments of invalidity, unenforceability and non-infringement. O2 Micro counterclaimed asserting infringement, and added MPS foundry as a counter-defendant. O2 Micro also filed suit in the Eastern District of Texas asserting infringement of the patent-in-suit and other patents, however that action was transferred to the Northern District of California and consolidated with the earlier filed action. The principle focus of the opinion was the district court s appointment of a Rule 706 expert. The district court, over O2 Micro s objection, elected to appoint an independent expert under Rule 706, FED. R. EVID. The parties agreed on an expert, who later prepared a report, made himself available for a deposition, and testified at trial. The jury was instructed that the expert was an independent witness retained by the parties jointly at the court s direction to assist in explaining the technology at issue in this case. The jury was further instructed that it should not give the independent expert s opinion any greater weight than any other witness testimony: You should not give any greater weight to Professor Santi s opinion testimony than to the testimony of any other witness simply because the court ordered the parties to retain an independent witness. In evaluating his opinion, you should carefully assess the nature of and basis for Professor Santi s opinion just as you would do with any other witness opinion. And the parties each presented their own expert witness testimony. In general, according to the opinion, the independent expert accepted MPS theory of the case. However, the jury did not entirely accept that testimony. For example, the independent expert opined that only claim 12 of the patent-in-suit would have been obvious, while the jury found that all claims would have been obvious. The jury also concluded that two claims were infringed under the doctrine of equivalents, while the independent expert had opined that only one claim was so infringed. In the end, the jury found that the asserted claims of the patent-in-suit were invalid, inter alia, under 103 as having been obvious. On appeal, the Federal Circuit affirmed. Laptop computers operate off of battery power and thus must be capable of operating on DC power sources. However, cold cathode fluorescent lamps ( CCFLs ) used for backlit laptop screens require high voltage, AC power. The circuitry of the disclosed invention converted low voltage DC battery power into higher voltage AC power through F.3d 1341 (Fed. Cir. 2009)(Opinion by Circuit Judge Rader, joined by Circuit Judges Plager and Gajarsa)(appeals from the United States District Court for the Northern District of California in Consolidated Case Nos. 04-CV-2000 and 06-CV-2929, Judge Claudia Wilken). 9

17 certain feedback circuitry that controlled the amount of power delivered to the CCFL, as illustrated in Fig. 2: In essence, the circuit chopped up DC current to form AC current for the CCFL. The asserted prior art was a single patent the Henry patent that disclosed several embodiments. On appeal, O2 Micro asserted that the Henry patent did not disclose three claim limitations, i.e., a flow-through switch of claims 2 and 9; a second state limitation of claims 1, 2, 9, and 18; and an only if limitation of claims 12 and 14. The Federal Circuit concluded that expert testimony in addition to the testimony from the independent expert provided substantial evidence to support the implicit jury s finding that the Henry patent disclosed all those limitations in different embodiments. O2 Micro asserted that even if the Henry patent disclosed those limitations in several embodiments, neither MPS s expert nor the independent expert had provided reasons or a motivation for combining the teachings of those embodiments. The Federal Circuit disagreed: To the contrary, upon review of the entire record, this court finds convincing the testimony of Drs. Santi and Horenstein that one of ordinary skill in the art would have had ample motivation to combine known elements in the claimed manner. These experts opined that inverter circuit designers routinely mix and match bridge topologies, overvoltage safety protections, and feedback methods all elements of the asserted claims and all conceded by O2 Micro to be well known in the art. 21 The Federal Circuit concluded that: Section 103 of Title 35 requires this court to inquire whether the improvement is more than the predictable use of prior-art elements according to their established functions. KSR Int l Co. v. Teleflex Inc., 127 S. Ct. 1727, 1740 (2007). Applying the law to the facts in the record, this court F.3d at

18 answers the inquiry in the negative and concludes that the asserted claims of the 722 patent are obvious as a matter of law. 22 Comment: The conclusion is not necessarily wrong, but points out that in the post- KSR world, at least for the moment (until the pendulum swings back again), finding all of the claim limitations in the prior art especially in the predictable arts, which are frequently viewed as the mechanical and electrical arts, as opposed to the chemical (and especially the pharmaceutical) arts is very close to foreordaining the conclusion, i.e., obviousness. Motivation to combine grew up in an era when patents were invalidated somewhat routinely when the various parts and pieces of a claim were found in the prior art and those parts and pieces continued to function in the claimed invention as they had in the prior art. Doing so predestined the result obviousness. The point Chief Judge Markey, Circuit Judge Rich, Circuit Judge Learned Hand, and many others have made over the years in noting, inter alia, that Only God works from nothing. Men must work with old elements, and insisting on a teaching, motivation or suggestion to combine the teachings of the references -- was simply that virtually all mechanical and electrical components in the prior art have established functions that do not and mostly cannot change when combined with other components. Accordingly, simply finding all of the parts and pieces in the prior art should not constitute sufficient evidence per se (especially given the clear and convincing quantum of proof necessary to show invalidity) to conclude that a particular combination would have been obvious to one of ordinary skill in the art. That is, at least in the mechanical and electrical arts, one of ordinary skill in the art routinely uses and perhaps for the most part is required to use well-known components having well-known capabilities and functions. If the use of well-known components having well-known capabilities and functions is allowed to predispose a decision maker (court or jury) to a finding of obviousness in predictable arts, few claims to mechanical or electrical inventions can escape a finding of invalidity based on obviousness. The Supreme Court in KSR did not per se dispense with the motivation requirement (only an overly rigid application of the same), but in portions of its opinion such as asking whether the improvement is more than the predictable use of prior-art elements according to their established functions drew a distinction between predictable and nonpredictable arts. The aftermath of KSR has been that at the time of this writing, a significant divide is developing between predictable arts and unpredictable arts. As of this writing, asserted claims to electrical and mechanical inventions in virtually every appealed case have been found to have been obvious while claims to chemical and especially pharmaceutical inventions have experienced a more even keel some valid, some invalid. Perhaps the insistence on finding a teaching, motivation or suggestion caused the pendulum to swing farther than necessary to ensure that a finding of obviousness was properly based on admissible proof, but the post-ksr pendulum arguably is likewise swinging too far in the opposite direction F.3d at Fromson v. Advance Offset Plate, 755 F.2d 1549, 1556 (Fed. Cir. 1985). 11

19 d) Rocket Science is Not Necessary for Invention or Maybe It Is: Judge Rader Castigates Panel Majority for Employing an Alleged Bias Against Non- Technical Arts In Media Technologies Licensing, LLC v. Upper Deck Co., 24 the panel majority, over a strong dissent by Circuit Judge Rader, affirmed the district court s holding on summary judgment that the asserted claims of Media Tech s two patents-in-suit, both of which had been the subject of reexamination proceedings, were invalid under 103 as having been obvious. Judge Rader dissented urging, inter alia, that [l]urking just beneath the surface of this court s blindness to the underlying facts supporting non-obviousness is a bias against non-technical arts. 25 Media Tech s two patents-in-suit were drawn to trading cards that included a piece of attached memorabilia. For example, in Figs. 1 and 2: the bat was formed from a piece taken from a bat used by the player for a memorable game, e.g., hitting a 40 th home run. A certificate of authenticity was included in block 20. Claim 1 of one of the patents-in-suit was representative: A memorabilia card comprising a substrate in the form of a card and having an image surface, the image surface including a background image and a foreground image, and wherein the foregoing image is of a famous figure, F.3d 1334 (Fed. Cir. 2010)(Opinion by Circuit Judge Mayer, joined by Circuit Judge Lourie, dissenting opinion by Circuit Judge Rader)(appeal from the United States District Court for the Central District of California in case no. 01-CV-1198, Senior Judge Alicemarie H. Stotler) F.3d at

20 a piece of a memorabilia item being adhered to the card adjacent to where an image of the actual item normally would appear, and the card including a certificate attesting to the authenticity of the item. The district court initially granted summary judgment for the defendants which the Federal Circuit, in an earlier opinion, reversed. The defendants then filed requests for reexamination of both patents-in-suit. A reexamination certificate issued for one of the patents-in-suit without any changes in the claims. A reexamination certificate issued for the second patent-in-suit that added certain claims. Following reexamination, the district court granted summary judgment for the defendants. The prior art consisted of (1) a trading card with a picture of Marilyn Monroe and a diamond attached to the card, (2) a piece of a bed sheet allegedly used by one of the Beatles attached to a copy of a letter on Whittier Hotel stationary declaring that the piece was authentic, (3) a piece of fabric allegedly belonging to a Capuchin Friar named Stephen Eckert attached to paper stock that included a picture of the friar, and (4) a greeting card structured to look like a novelty item that allegedly included a piece of jeans material that belonged to James Dean. Media Tech argued that Monroe s diamond was not a memorabilia item or a piece as required by the claims. The district court, however, had construed memorabilia as an object valued for its connection with historical events, culture or entertainment. The panel majority concluded that the diamond constituted memorabilia under that construction. The panel majority also concluded that if the diamond did not satisfy the a piece language of the claim, the Whittier, Eckert and Dean references taught using a piece of memorabilia. Media tech argued that Whittier did not teach use of a card. The panel majority concluded that Monroe, however, taught the use of a card. The panel majority further concluded that Dean taught the use of memorabilia, and that authenticity was taught by Whittier and Eckert. No reference taught a sports trading card as required by one claim of one of the patents-in-suit. The panel majority, however, noted that the defendants had submitted testimony that a trading card designer routinely used concepts found in other card industries. Media Tech argued that one of ordinary skill in the art would not have combined the references, or applied the concepts to sports cards, because (1) there was an inability to predict that a trading card would convey that the memorabilia was authentic, and (2) the trading card art included an infinite number of identified and unpredictable solutions. The panel majority rejected that argument reasoning that consumer acceptance came from the credibility associated with the 90-year old trading card industry. The panel majority further reasoned although there were a number of different characteristics for trading cards, such as color, typefaces etc., content was limited to the theme and physical limitations of the card. With respect to secondary considerations, the panel majority rejected Media Tech s long felt but unsolved need contention because it was commensurate with the scope of the claims. The panel majority also rejected Media Tech s skepticism by the industry argument based on alleged outrage at the idea of destroying valuable sports 13

21 memorabilia. The panel majority reasoned that such alleged outrage did not equate to a belief that the such cards would fail. With respect to commercial success, the panel majority concluded that Media Tech had not shown the requisite nexus between the claimed invention and the alleged commercial success. In particular, the defendants urged that innovative packaging, i.e., a 3- ply card with the memorabilia piece sandwiched between layers of cardstock, was the cause of the commercial success. The panel majority wrote that [i]n short, from all that appears, whatever success was enjoyed came from celebrity, not invention. 26 Judge Rader dissented urging that [r]elying on wholly irrelevant prior art and ignoring significant objective indicia of non-obviousness, this court substitutes its judgment on patentability for that of a jury. Lurking just beneath the surface of this court s blindness to the underlying facts supporting non-obviousness is a bias against non-technical arts. 27 Judge Rader added: No doubt, the invention of the transistor or of the polio vaccine came from more scientific fields and contributed more to the welfare of humanity. This court, however, cannot overlook that many individuals invest vast energies, efforts, and earnings to advance these non-technical fields of human endeavor. Those investments deserve the same protection as any other advances. The incentives for improvement and the protection of invention apply as well to the creator of a new hair-extension design as to a researcher pursuing a cure for cancer. In either case, the PTO and this court are charged with assessing the invention disclosure to determine its worthiness to receive a valuable, but temporally limited, exclusive right. Because this court dismisses this case so readily, I respectfully dissent. 28 Judge Rader noted when the first application maturing in one of the patents-in-suit was filed in 1994, no reference taught attaching a cut-up piece of memorabilia to a baseball card. Further the concept was met with skepticism by the major trading card companies, including the defendants. The industry, according to Judge Rader, rejected the concept reasoning that the value of a memorabilia item depending on its physical preservation: the notion of cutting up an authentic player s jersey into numerous pieces and attaching it to a trading card seemed sure to destroy far more value than it could ever create. According to the standard wisdom in this field, the dismembered jersey could not enhance the value of either the jersey or the card. 29 Judge Rader noted, however, that a year after the inventor had approached Upper Deck, Upper Deck began selling limited edition cards with cut-up pieces of jerseys attached to the player s image. The new product, according to Judge Rader, quickly became F.3d at F.3d at F.3d at F.3d at

22 successful, and was touted in the trade press. One article, according to Judge Rader, lauded Upper Deck s product: Can you imagine anyone cutting a game-used Dan Marino jersey into little pieces? Proud owners of such memorabilia probably wouldn t even keep a pair of scissors in the same room as No. 13. But Upper Deck does. For the Southern California company, combining sharp instruments with authenticated jerseys has been as successful as the combination of sports cards and memorabilia. Last month s issue of Sports Cards Magazine had Upper Deck s Game Jerseys and A Piece of the Action cards in the top two on the demand list for insert singles for baseball, hockey, football and racing. * * * Based on Upper Deck s early success, it s apparent that Game Jerseys are exactly what collectors wanted. 30 Another trade magazine similarly lauded the innovation: There was a time when spreading peanut butter and jelly between two slices of bread may have been an unthinkable combination. Today, millions of school children, and just as many grown-ups, rely upon the celebrated sandwich as a lunch-time staple. So it goes with most ground-breaking ideas; an open mind plays an important role in developing a vision. Those who look beyond the ordinary can often see the future. Those who don t simply mutter, Why didn t I think of that? The creative minds at Upper Deck search for that elusive gem every day, striving to provide collectors with the hobby s version of the next PB&J. As for the company s Game Jersey idea a unique card set randomly inserted into all Series I packs of 1997 Upper Deck baseball it s not exactly edible. But, gauging from collector interest, it is desirable. 31 According to Judge Rader, [t]hese excerpts are only a small sample from the record of the accolades for the Gluck invention. With various marketing campaigns and advertisement promotions touting the idea behind the 501 patent as their focal point, the newly-released cards became a staple of the industry. Using the invention, Upper Deck swept to the forefront of this new wave. 32 With respect to the prior art, Judge Rader noted that none of the prior art references are remotely related to the sport trading card industry. The defendants failure to proffer any reference in the relevant field of invention is telling given the century-old history of this industry. Perhaps claim 1 can fairly be interpreted to include memorabilia items beyond the sporting world, but other asserted claims are expressly limited to sports trading F.3d at F.3d at F.3d at

23 cards. Thus, this court ought to seek at least some prior art in the primary field of its application and use. And the absence of any prior art in that area ought to speak volumes. 33 Judge Rader urged that (1) the diamond on the Monroe reference did not qualify as memorabilia and was not a piece as required by some of the claims, (2) the bed sheet in one of the Whittier exhibits offered into evidence was admittedly a fake, and the reference did not disclose a trading card or photo, (3) the Eckert reference was a holy card used to familiarize the public with religious figures, did not disclose a memorabilia item, and was not valued like trading cards, and (4) the Dean reference included an admittedly fake piece of jeans, and was intended as a joke. Lastly, Judge Rader questioned why the panel majority, on reviewing a grant of summary judgment, gave more weight to the testimony of the defendants expert than to Media Tech s expert. Judge Rader remarked that the defendants expert s declaration to my eyes, resounds with conclusory statements that lack any convincing reference to the actual record. To rely on such expertise without considering the countervailing factual evidence on record contravenes the role of a court at the summary judgment stage and gives accused infringers a free pass to avoid a jury s judgment on the facts in a sense, a get-out-of-jailfree card (no pun intended) Motivation a) It Remains Appropriate Post-KSR For Courts to determine whether there was an apparent reason to combine the known elements in the fashion claimed by the patent at issue In Fresenius USA, Inc. v. Baxter Int l, Inc., 35 Baxter s three patents-in-suit were drawn to a hemodialysis machine integrated with a touch screen user interface. The patents-in-suit stemmed from a patent application filed in At that time, touch screens were known and had been used on other medical devices, such as a heart-lung machine, but had not been used with a hemodialysis machine. Baxter s machine, the System 1000, was introduced in 1991 and was successful. Fresenius introduced its allegedly infringing machine, the 2008K, in Fresenius filed a declaratory judgment action seeking judgments that the patents-insuit were invalid and/or not infringed. Baxter counterclaimed for infringement. The district court granted partial summary judgment that Fresenius accused machine infringed one claim each of two of the patents-in-suit. Following claim construction, Fresenius stipulated that the accused machines infringed the other asserted claims. On the issue of validity, a jury F.3d at F.3d at F.3d 1288 (Fed. Cir. 2009)(Opinion by Circuit Judge Gajarsa, concurring opinions by Circuit Judges Newman and Dyk)(appeals from the United States District Court for the Northern District of California in case no. 03-CV-1431, Judge Saundra Brown Armstrong). 16

24 concluded that several claims of one of the patents-in-suit were invalid as anticipated, and that all asserted claims were invalid as having been obvious under 103. The jury also awarded Baxter over $ 14 million in damages. The district court, however, granted Baxter JMOL concluding that the asserted claims were not invalid as having been obvious. Specifically, the district court concluded that (1) Fresenius had not presented evidence that certain limitations in the claims were found in the prior art, and (2) Fresenius had not provided sufficient evidence of a motivation to combine. On appeal, the Federal Circuit affirmed-in-part and reversed-in-part. Specifically, with the exception of certain means-plus-function limitations found in claims in one of the patents-in-suit, the Federal Circuit concluded that all of the limitations of the claims were found in the prior art. The Federal Circuit also concluded that the prior art provided a motion to combine. The Federal Circuit expressly held that it remains appropriate for a post-ksr court considering obviousness to determine whether there was an apparent reason to combine the known elements in the fashion claimed by the patent at issue. 36 Fresenius had introduced a prior art publication that disclosed the use of a touch screen interface on a medical device, i.e., an anesthesia-delivery system. That publication also noted that hemodialysis was a rapidly developing area of medicine, and disclosed that complex technologies, like hemodialysis, could benefit from an improved user interface. Dr. Rau, the author of the publication, testified that his publication mentioned hemodialysis and pointed to portions of his publication that he believed suggested adding a touch screen to a hemodialysis machine. Another Fresenius witness testified concerning the ease of integrating a touch screen with a computer-controlled machine, and opined that as of the filing date it would not have been difficult for one to integrate a touch screen interface with a hemodialysis machine. The Federal Circuit noted that under KSR, if a technique has been used to improve one device, and a person of ordinary skill in the art would recognize that it would improve similar devices in the same way, using the technique is obvious unless its actual application is beyond his or her skill. 37 Also, [t]he combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results. 38 The Federal Circuit reasoned that the jury had implicitly found that combining a touch screen with known elements of a hemodialysis machine was suggested by the prior art. The court concluded that finding was supported by substantial evidence, namely Dr. Rau s and the other expert s testimony. Accordingly, the Federal Circuit concluded that the district court s grant of JMOL was error. b) Motivation to Add Known HTML Content Location Tags May Come From Market Pressure to Bring F.3d at 1300, quoting KSR, 550 U.S. at F.3d at 1301, quoting KSR, 550 U.S. at F.3d at 1301, quoting KSR, 550 U.S. at

25 Features of Non-Web Based Programs to the Web In Dow Jones & Co., Inc. v. Ablaise Ltd., 39 the Federal Circuit affirmed the district court s grant of summary judgment that one of the two patents-in-suit was invalid under 103 for obviousness, but reversed the district court s denial of Ablaise s motion to dismiss vis-à-vis the second patent-in-suit after Ablaise had offered a covenant-not-to-sue. The issue of obviousness will be addressed here. The two patents-in-suit (Patent A and Patent B) were drawn to methods for generating customized web pages for specific individuals viewing them based upon encoded information. By way of background, the World Wide Web component of the Internet uses a Hypertext Transfer Protocol (HTTP) that allows a Web browser to request a Web server to send specific content to a user s PC, including layout and content instructions. Hypertext Markup Language (HTML) uses sets of instructions that control the format of a Web page displayed on a user s PC. HTML uses tags to do so. For example, <b> indicates that following text should be in bold until the tag </b> is reached. The priority date of the two patents-in-suit was May 15, 1995, and it was undisputed that HTML was well known by that time. It was also known that Web pages could be dynamically generated on the fly in which HTML formatting instructions for a Web page were given after a Web page was requested by a user. The two patents-in-suit were drawn to methods for using a Web server to send individualized content and formatting instructions on the fly in response to user preferences encoded in an HTTP request for a specific Web page. Claim 1 of Patent A called for: A method for serving pages of viewable data to browsing devices connected to a network, wherein a page of said viewable data comprises content data defining text and/or graphics and formatting data which specifies locations of said text and/or graphics within a page, and said viewable data is displayed at a browsing device such that locations of said text and/or graphics depend on said formatting data, said method comprising: identifying requests from browsing devices that define a request for specified content data; storing content data; storing executable functions; maintaining a user database comprising information relating to user preferences; F.3d 1338 (Fed. Cir. 2010)(Opinion by Chief Judge Michel, joined by Circuit Judge Rader and Chief District Judge Folsom, E.D. Tx., sitting by designation)(appeal from the United States District Court for the District of Columbia in case nos. 06-CV and 06-CV-01015, Judge James Robertson). 18

26 and in response to identifying a request for specified content data and a user identifier; (a) reading user preference information from said user database in response to a received user identifier; (b) selecting stored content data in dependence upon the content data specified in a received request; (c) receiving format identifiers identifying the type of formatting required; (d) selecting a set of stored functions in dependence upon a received format identifier and said read user information; and (e) executing said set of functions to generate viewable data comprising said selected content data and formatting data. The prior art consisted of (1) Fishwrap, an online newspaper developed at MIT that used script to dynamically generate HTML formatted Web pages in response to a reader s preferences for specific content, including a database that recorded a user s reading habits and used that information in displaying content (for example, displaying a sports page first if that was a reader s habit), (2) a Bobo patent that was drawn to a system for accessing faxes by receiving HTML pages on the Web, including storing a reader s preferences for how such fax would be viewed (i.e., first page, text with a thumbnail image, images of all pages etc.), and (3) an HTGrep program that performed searches for remote files using keywords, and which returned results in HTML formatted Web pages according to user preferences, e.g., in paragraph form or a bulleted listed. Abalise accused Dow Jones of infringement and offered a license. Dow Jones filed a declaratory judgment action urging that the patents-in-suit were invalid and not infringed. Ablaise counterclaimed for infringement. After a Markman hearing, Ablaise offered Dow Jones a covenant-not-to-sue on Patent B if Dow Jones agreed to dismiss its invalidity claim. Dow Jones demanded that Ablaise include Dow Jones parent, News Corporation, in the covenant-not-to-sue. Abalise refused, and moved to dismiss Dow Jones invalidity claim vis-à-vis Patent B urging that the covenant-not-to-sue divested the court of jurisdiction. The district court denied the motion. Dow Jones subsequently moved for summary judgment that both Patents A and B were invalid for obviousness and anticipation. The district court granted the motion finding that the asserted claims of Patent A would have been obvious over Bobo and the general knowledge in the field, and that the asserted claims of Patent B were anticipated by HTGrep. On appeal, the Federal Circuit concluded that Abalise s offer of a covenant-not-to-sue divested the district court of jurisdiction vis-à-vis Patent B, and affirmed the summary judgment that the asserted claims of Patent A would have been obvious. Ablaise had conceded that (1) HTML tags affected content location on a Web page, (2) HTML and the functions of tags was well-known as of the priority date, (3) HTML tags in use as of the priority date controlled where certain information, i.e., text or images, appeared on a Web page, and (4) Fishwrap used HTML tags to affect content location on Web pages. 19

27 The district court concluded that a modifying Bobo to incorporate location-changing HTML tags would have been obvious to one of ordinary skill in the art, noting, inter alia, that the Bobo patent used the HTML <image> tag and Albaise conceded that met the formatting data limitation of claim 1. The district court reasoned that one of ordinary skill in the art would therefore simply have to add an alignment tag, known in HTML, to meet all of the limitations of claim 1. The district court reasoned that modification yielded predictable results. With respect to motivation, the district court noted that before the priority date, there was a tremendous amount of technological development seeking to increase the usability of web pages and to bring the established features of various computer programs to the web platform. The district court also noted that the parties acknowledged that one of the established features of non-web programs was the capacity to personalize formatting. The district court concluded that those facts presented clear and convincing evidence of both design need and market pressure to add location-changing HTML tags to the Bobo patent. Ablaise argued that the district court had failed to explain why one of ordinary skill in the art would have been motivated to look at the teachings of a fax converter to change the location of content. Abalise also argued that the Bobo patent in combination with an HTML image alignment tag did not disclose the limitations related to the use of a format identifier and did not provide the same content in different formats for different users. The Federal Circuit concluded that: Ablaise s arguments miss the mark entirely. The district court correctly recognized that the Bobo patent was designed to permit a user to vary the content of the Web page in question according to her preferences, but also recognized that it would have been obvious to an artisan of ordinary skill to use HTML language that was well-understood at the time to position the content in different locations on the screen. Consequently, we see no fault in the district court s reasoning. Furthermore, Ablaise elides the fact that, as the district court recognized, it conceded that an <image> tag accompanied by an alignment tag would meet the formatting data limitation of claim The Federal Circuit also rejected Ablaise s argument that the district court had relied on hindsight: However, Ablaise does not dispute that there was both design need and market pressure to add location-changing HTML tags to the Bobo patent. Nor does Ablaise dispute that personalized formatting was well-known on non-web products such as database systems or that during the relevant period there was an effort in the art to bring established features of non-web programs to the Web. 41 Indeed, according to the Federal Circuit, Ablaise implicitly concedes that the only differences between Bobo and the invention disclosed in the 737 patent is the extension of the user-selected display options presented by Bobo to personalize the location of text or graphics on the page. Such changes in location were well-known in both non-web applications and in the HTML language extant at the time and known to artisans of ordinary F.3d at F.3d at

28 skill. Given all of these factors, the district court did not err in determining that the invention disclosed in [Patent A] would have been obvious to an artisan of ordinary skill in light of Bobo and the known art. 42 c) Although an Explicit Teaching, Suggestion or Motivation to Combine Prior Art References is Not Required, It May Nevertheless be important to identify a reason that would have prompted a person of ordinary skill in the relevant field to combine the elements in the way the claimed new invention does In Hearing Components, Inc. v. Shure, Inc., 43 the Federal Circuit affirmed a jury s conclusion that the asserted claims of two of the patents-in-suit, drawn to hearing aid ear pieces, were not shown to be invalid under 103 as having been obvious. The Federal Circuit relied primarily on the fact that the jury had resolved conflicting views by the parties respective experts. The patents-in-suit were drawn to a hearing aid ear piece connected to a disposable, compressible foam sleeve by an attaching or fastening means, for inserting into the ear canal, such as shown in Figs. 1 and 4: Claim 1 of one of the patents-in-suit, for example, called for: 1. An ear piece component for use with a user-disposable sleeve, having a duct and soft polymeric foam firmly secured to the duct, to facilitate transmission of sound to an ear canal of a user, said ear piece component comprising: a connecting portion having (i) distal and proximal ends and an exterior surface between said distal and proximal ends, (ii) a sound tube extending F.3d at Comment: The question is not, of course, whether the invention disclosed in Patent A would have been obvious, but rather whether the asserted claims would have been obvious F.3d 1357 (Fed. Cir. 2010)(Opinion by Circuit Judge Lourie, joined by Circuit Judges Rader and Schall)(appeal from the United States District Court for the Eastern District of Texas in Case No. 9:07-CV- 104, Judge Ron Clark). 21

29 through said connecting portion between said distal and proximal ends, and (iii) means on said exterior surface for disposably attaching the duct of the sleeve to said connecting portion, and a flange portion secured to said proximal end. Shure contended that the asserted claims were invalid under 103 as having been obvious over one or three combinations of prior art: (1) Carlisle and Gardner, (2) Carlisle and Killion, and (3) Killion and Rock. Shure contended that Carlisle taught all of the limitations of the claims except the use of slow-recovery foam, which was taught by Gardner and Killion. Shure further contended that Killion taught all of the claim limitations except the use of mating male and female connecting features, which were taught by Carlisle. Shure further asserted that Rock taught the use of a barb, like Shure s barbed nozzle in one of the accused products, and thus Shure was practicing the prior art. Hearing Components argued that Carlisle did not suggest a sound isolating seal or a sleeve that was replaced by a user, but rather was replaced by a professional. Hearing Components also asserted that Carlisle s ear piece were not inside the ear canal, and Killion was not a hearing device but rather a diagnostic device operated by a professional, and had no ear piece inserted into a sleeve. The Federal Circuit, in affirming the district court s denial of Shure s motion for JMOL on the issue of invalidity, concluded that [w]e agree with the district court that the jury heard substantial evidence to support a finding of nonobviousness. As the [district] court emphasized, in order for a party to meet its burden of proving obviousness by clear and convincing evidence, the specific evidence must have been presented to the jury. * * * As the court found, the jury heard conflicting testimony from Drs. Chasin and Wood [the parties respective expert witnesses] on whether the prior art references contained all of the claim limitations, on motivation to combine, and on secondary considerations of nonobviousness. 44 The Federal Circuit also agreed that substantial evidence supported a conclusion that Killion would not have been combined with either Carlisle or Rock to produce the claimed device because Dr. Chasin testified that Killion described a device that was used to test hearing, rather than to improve the quality of sound. 45 The Federal Circuit noted that [a]lthough, as Shure points out, our law does not require an explicit teaching, suggestion, or motivation to combine prior art references, * * * it may nevertheless be important to identify a reason that would have prompted a person of ordinary skill in the relevant field to combine the elements in the way the claimed new invention does, 46 citing KSR. 47 Essentially, the Federal Circuit viewed this as a battle of experts: In this case, where Dr. Wood [Shure s expert] gave testimony that was rather sparse, and lacking in specific F.3d at F.3d at F.3d at U.S. at

30 details, and Dr. Chasin [Hearing Components expert] described particular reasons why one skilled in the art would not have been motivated to combine the references, we agree with the district court that substantial evidence supported a finding of nonobviousness. 48 The Federal Circuit also found that Hearing Components had provided substantial evidence of secondary considerations. Shure argued that Hearing Components had not shown a nexus between the claimed invention and the secondary considerations. The Federal Circuit disagreed: Hearing Components showed such a nexus in that the licensing fee for a covered product was more than cut in half immediately upon the expiration of the 151 patent, supporting its contention that the success of the device was related to the patent Obvious To Try a) Choosing Among Known Options For an Acid- Sensitive Drug Constitutes Obvious to Try In Bayer Schering Pharma AG v. Barr Laboratories, Inc., 50 Bayer was the owner of the patent-in-suit related to the daily oral contraceptive, Yasmin. Claim 1 was representative: 1. A pharmaceutical composition comprising from about 2 mg to about 4 mg of micronized drospirenone particles, about 0.01 mg to about 0.05 mg of 17.alpha.-ethinylestradiol, and one or more pharmaceutically acceptable carriers, the composition being in an oral dose form exposed to the gastric environment upon dissolution, and the composition being effective for oral contraception in a human female. Barr filed an ANDA seeking approval to market a generic version of Yasmin. Bayer responded with a suit for infringement. The district court granted summary judgment of invalidity under 103. On appeal, the panel majority, with Circuit Judge Newman dissenting, affirmed. One of the active ingredients in Yasmin, drospirenone, as a progestin that inhibited ovulation. Drospirenone was known in the art. It was also known that drospirenone was a diuretic that diminished excess water retention, and had anti-acne qualities that promoted clear skin F.3d at F.3d at F.3d 1341 (Fed. Cir. 2009)(Opinion by Circuit Judge Mayer, joined by Senior Circuit Judge Friedman, dissenting opinion by Circuit Judge Newman)(appeal from the United States District Court for the District of New Jersey in case no. 05-CV-2308, Judge Peter G. Sheridan). 23

31 Drospirenone, however, was also acid-sensitive. When exposed to low-ph (highly acidic) environments such as found in the human stomach, drospirenone isomerized into an isomer that did not act as a diuretic. Drospirenone was also poorly water soluble which degraded its bioavailability. Pharmaceutical companies, in such instances, use micronization to increase the surface area leading to higher bioavailability. According to the majority s opinion, all commercially available oral contraceptives used micronized progestins and/or estrogens, and that technique was well known in the art. Micronizing could also, though, increase acid-sensitivity. One method used to decrease acid-sensitivity was to use an enteric coating. However, an enteric coating could reduce bioavailability, at least in some individuals. The complication was that the drug had to be 99% effective for all women. In 1983, work began at Bayer to develop drospirenone into an oral contraceptive. Work had been done on spirorenone, a related compound, that metabolized into drospirenone when consumed. Prior Bayer work included in vitro work with drospirenone and in vivo studies with spirorenone resulted in three published articles Krause I, II and III. It was known that drospirenone was a metabolite of spirorenone. Further studies reached the conclusion that if the results of the in vitro studies were applied to in vivo conditions, bioavailability would be reduced: If the results obtained in vitro are applied to in vivo conditions, it can be presumed that, with an assumed gastric juice volume of 100 ml, the majority of the dose (solubility of drospirenone 5-10 mg/l) passes into solution during passage through the stomach and consequently undergoes rapid isomerization. A clear reduction in the bioavailability of the unchanged active substance is to be expected as a result. The planned studies on the progestogenic efficacy of [drospirenone] should therefore be performed with an enteric-coated formulation. The conclusion was that studies on an enteric-coated composition should be launched. Five years of study ensued during which it was determined that drospirenone needed an enteric coating because it isomerized quickly in a ph 1 acidic solution. In 1988, Bayer also planned a study to compare an enteric-coated tablet to an intravenous injection of the same formulation to determine absolute bioavailability. The study revealed, however, that a normal pill and an enteric-coated pill resulted in the same bioavailability. That eventually resulted in the patent-in-suit. Indeed, during prosecution, Bayer relied on the finding that drospirenone would absorb like a normal pill to overcome an obviousness rejection. The examiner allowed the claims, giving the specific reason that the prior art suggested that micronizing drospirenone would not work. The parties at trial agreed that 2-4 mg drospirenone was well known in the art, as well as its combination with mg 17α-ethinylestradiol, a pharmaceutically acceptable carrier, and a kit containing 21 such tablets with active ingredients and 7 placebos, to be used as an effective oral contraceptive in human females. Bayer asserted that its innovation was that the drospirenone could be micronized to increase its bioavailability, and that the 24

32 micronized drospirenone would not need to be enteric coated for protection against the highly acidic gastric environment. The district court found that a person of ordinary skill in the art would have considered the Krause I, II, and III studies results that spirorenone though acid-sensitive would nevertheless absorb in vivo because drospirenone was closely related to spirorenone. The district court also found that although the prior art (a Nickisch reference) taught that drospirenone isomerizes in vitro when exposed to acid simulating the human stomach, a person of ordinary skill would be aware of the study s shortcomings, and would verify whether drospirenone absorbed or isomerized with precise in vivo and in vitro testing as suggested by another reference (the Aulton treatise). The district court held that it would have been obvious to try a normal pill in formulating drospirenone as an oral contraceptive. On appeal, the Federal Circuit panel majority affirmed. Bayer argued, inter alia, that it would not have been obvious to use micronization because of the knowledge that resulted in increased acid-sensitivity. However, Bayer s expert witness testified that micronization was the first choice solution because it presented the best chance for success. Thus, despite the known drawback, the panel concluded that there was adequate support for the conclusion that micronization was a viable option. With respect to the enteric-coating vs. normal pill, Bayer argued that formulation scientists knew from the prior art to use enteric coatings to decrease acid-sensitivity. Barr, on the other hand, argued that would only be used as a last resort because it was complicated, expensive, cumbersome, and prone to variability. The district court relied on the Aulton treatise in concluding that the knowledge was somewhere in between, i.e., it was known that an enteric coating could be used on acid-sensitive drugs, but that such coating decreased bioavailability. According to the Federal Circuit, [i]n effect, while Bayer argued that prior art teaches away from using micronized drospirenone in a normal tablet, Barr argued that the prior art teaches away from using an enteric coating. What the parties have done, however, is present the options available to a pharmaceutical formulator having ordinary skill to solve the problem of acid-sensitive but hydrophobic drospirenone. 51 According to the panel majority, the Krause articles can be used to show that a drug formulator having ordinary skill had a viable known option to consider with micronized, unprotected drospirenone, and a reasonable expectation that drospirenone would perform similarly (even if not identically) to the spirorenone in the Krause series. 52 The Federal Circuit noted further that the district court had found that a person of ordinary skill in the art would recognize that the Nickisch references establishes that drospirenone isomerizes in vitro, but would be alerted to the study s shortcomings when used in vivo. The panel majority reasoned that [a]t this point, a person having ordinary skill in the art has reached a crossroads where he must choose between two known options: delivery of F.3d at F.3d at

33 micronized drospirenone by a normal pill following the spirorenone analogy in the Krause series, or delivery of drospirenone by an enteric-coated pill following the Nickisch teaching that the drug needs to be protected from the stomach. This is a finite number of identified, predictable solutions. 53 The panel majority concluded that [b]ecause the selection of micronized drospirenone in a normal pill led to the result anticipated by the Krause series, the invention would have been obvious. 54 Circuit Judge Newman dissented urging that [t]he evidence showed, without contradiction, that it was known that micronized drospirenone rapidly degraded at the acidity of stomach acid. The evidence showed, without contradiction, that the Bayer scientists working in this field believed that the product required an enteric coating in order to prevent degradation in the stomach, upon ingestion as an oral contraceptive. 55 In Judge Newman s view, there was thus no reasonable expectation of success. Judge Newman argued that [t]he law does not hold it obvious to try experiments that contravene conventional knowledge, and that are not deemed reasonably likely to succeed. The evidence in this case is a better measure of obviousness than is the hindsight science of judges, for the scientists who eventually made this discovery testified, without dispute, that they did not believe an uncoated micronized product would meet the demanding criteria of contraceptive effectiveness. 56 In her view, [n]othing in the prior art teaches the likelihood of success of ingestion of uncoated micronized drospirenone; what is taught is the likelihood of failure F.3d at F.3d at F.3d at F.3d at F.3d at

34 4. Common Sense a) While an Analysis of Obviousness Depends on Evidence That Supports the Required Graham Findings, That Analysis May Include Recourse to Logic, Judgment and Common Sense That do Not Necessarily Require Explication in Any Reference or Expert Opinion: On Summary Judgment, to Invoke Common Sense or Other Basis For Extrapolating From Prior Art to a Conclusion of Obviousness, a District Court Must Articulate Its Reasoning With Sufficient Clarity For Review In Perfect Web Technologies, Inc. v. InfoUSA, Inc., 58 the Federal Circuit explained when common sense may be used to reach a conclusion of obviousness. Perfect Web s patentin-suit was drawn to methods of managing bulk distribution to groups of targeted customers. The claimed method involved comparing the number of successfully delivered e- mail messages against a predetermined desired quantity, and then repeating the process until the desired number of delivered messages had been sent. Claim 1 was representative: 1. A method for managing bulk distribution comprising the steps: (A) matching a target recipient profile with a group of target recipients; (B) transmitting a set of bulk s to said target recipients in said matched group; (C) calculating a quantity of s in said set of bulk s which have been successfully received by said target recipients; and, (D) if said calculated quantity does not exceed a prescribed minimum quantity of successfully received s, repeating steps (A)-(C) until said calculated quantity exceeds said prescribed minimum quantity. The district court, after conducting a Markman hearing, but without issuing a formal claim construction order, granted summary judgment of invalidity under 103 for obviousness. The district court found that steps (A)-(C) were in the prior art, and step (D) would be obvious to virtually anyone. On appeal, the Federal Circuit affirmed. The district court concluded that a person of ordinary skill in the art had at least a high school diploma, one year of experience in the industry, and proficiency with computers and programs. After finding that steps (A)-(C) were in the prior art, the district F.3d 1324 (Fed. Cir. 2009)(Opinion by Circuit Judge Linn, joined by Circuit Judges Dyk and Prost)(appeal from the United States District Court for the Southern District of Florida in case no. 07-CV , Senior Judge Kenneth L. Ryskamp). 27

35 court found that step (D) would have been obvious: the final step is merely the logical result of common sense application of the maxim try, try again. 59 On appeal, Perfect Web did not contest that steps (A)-(C) were in the prior art, and InfoUSA conceded that step (D) was not shown in the prior art. Perfect Web argued, inter alia, that there were unresolved factual issues whether common sense taught step (D). In particular, Perfect Web argued that common sense or knowledge must be rooted in evidence and factual findings, because they play the same role as the inquiry into whether the prior art contains any teaching, suggestion or motivation ( TSM ) that would have led a person of ordinary skill to produce the claimed invention. 60 The Federal Circuit disagreed. The Federal Circuit explained that [i]n rejecting rigid application of the teaching, suggestion, or motivation test for obviousness, the Supreme Court observed that common sense can be a source of reasons to combine or modify prior art references to achieve the patented invention. In KSR, the Court offered guidance that has now been cited repeatedly: When there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue the known options within his or her technical grasp. If this leads to the anticipated success, it is likely the product not of innovation but of ordinary skill and common sense. In that instance the fact that a combination was obvious to try might show that it was obvious under The Federal Circuit further noted that [w]hile the Court warned against the distortion caused by hindsight bias and * * * ex post reasoning, it also noted: Common sense teaches * * * that familiar items may have obvious uses beyond their primary purposes, and in many cases a person of ordinary skill will be able to fit the teachings of multiple patents together like pieces of a puzzle. 62 The Federal Circuit urged that was consistent with its own precedent although the court had previously criticized reliance on common sense. The Federal Circuit reasoned that [c]ommon sense has long been recognized to inform the analysis of obviousness if explained with sufficient reasoning, 63 citing In re Bozek, 64 a 1969 CCPA case, that it was proper for an examiner to rely on common knowledge and common sense of the person of ordinary skill in the art without any specific hint or suggestion in a particular reference F.3d at 1327, quoting the district court s slip opinion, Perfect Web Techs., Inc. v. InfoUSA, Inc., No. 07-CV (S.D. Fla. Oct. 24, 2008), at F.3d at , quoting Perfect Web s brief F.3d at 1328, quoting KSR Int l Co. v. Teleflex, Inc., 550 U.S. 398, 421 (2007)(emphasis added) F.3d at 1328, quoting KSR, 550 U.S. at F.3d at F.2d 1385, 1390 (CCPA 1969) F.3d at 1328, quoting Bozek, 416 F.2d at

36 In In re Zurko, 66 a 2001 Federal Circuit case, the court criticized the examiner for relying on good common sense when basic knowledge and common sense was not based on any evidence in the record. 67 In In re Lee, 68 a 2002 Federal Circuit case, the court wrote that when the PTO enters a rejection for obviousness, it must not only assure that the requisite findings are made, based on evidence of record, but must also explain the reasoning by which the findings are deemed to support the agency s conclusion. 69 According to the Federal Circuit, Lee recognized that, under Bozek, even though common knowledge and common sense do not substitute for facts, they may be applied to analysis of the evidence. 70 Id. at According to the Federal Circuit, that did not preclude examiners from employing common sense. The court pointed to Dystar Textilfarben GmbH v. C.H. Patrick Co., 71 and its comment that use of common sense does not require a specific hint or suggestion in a particular reference, only a reasoned explanation that avoids conclusory generalizations. The court also pointed to Leapfrog Enters. v. Fisher-Price, Inc., 72 and its comment that common sense of those skilled in the art demonstrates why some combinations would have been obvious where others would not. The Federal Circuit reasoned that [i]n counseling that courts need not seek out precise teachings directed to the specific subject matter of the challenged claim, the Supreme Court clarified that courts may look to a wider diversity of sources to bridge the gap between the prior art and a conclusion of obviousness. 73 The Federal Circuit further reasoned that [w]hen considering these sources, the Supreme Court remarked that [r]igid preventative rules that deny factfinders recourse to common sense, however, are neither necessary under our case law nor consistent with it. 74 The Federal Circuit concluded that [t]hus, the Supreme Court instructed that factfinders may use common sense in addition to record evidence F.3d 1379, 1383, 1385 (Fed. Cir. 2001) F.3d at 1328, quoting Zurko, 258 F.3d at F.3d 1338, 1344 (Fed. Cir. 2002) F.3d at 1328, quoting Lee, 277 F.3d at F.3d at 1329, quoting Lee, 277 F.3d at F.3d 1356, 1366 (Fed. Cir. 2006) F.3d 1157, 1161 (Fed. Cir. 2007) F.3d at 1329, quoting KSR, 550 U.S. at F.3d at 1329, quoting KSR, 550 U.S. at F.3d at

37 The Federal Circuit further explained: As an example of this flexibility, KSR noted that courts should avoid overemphasis on the importance of published articles and the explicit content of issued patents. Id. at 419. Nor are expert opinions always a prerequisite, for [i]n many patent cases expert testimony will not be necessary because the technology will be easily understandable without the need for expert explanatory testimony. Centricut, LLC v. Esab Group, Inc., 390 F.3d 1361, 1369 (Fed. Cir. 2004) (quotation omitted); see also Sundance, Inc. v. Demonte Fabricating Ltd., 550 F.3d 1356, 1365 (Fed. Cir. 2008) (affirming obviousness where [t]he technology is simple and neither party claims that expert testimony is required ). We therefore hold that while an analysis of obviousness always depends on evidence that supports the required Graham factual findings, it also may include recourse to logic, judgment, and common sense available to the person of ordinary skill that do not necessarily require explication in any reference or expert opinion. The Federal Circuit also explained that [a]lthough the obviousness analysis should take account of the inferences and creative steps that a person of ordinary skill in the art would employ, the Supreme Court emphasized that this evidentiary flexibility does not relax the requirement that, [t]o facilitate review, this analysis should be made explicit. * * * [T]he analysis that should be made explicit refers not to the teachings in the prior art of a motivation to combine, but to the court s analysis. 76 The Federal Circuit concluded: We reiterate that, on summary judgment, to invoke common sense or any other basis for extrapolating from prior art to a conclusion of obviousness, a district court must articulate its reasoning with sufficient clarity for review. 77 The Federal Circuit found that the district court had done so here. In this case, we find that the predicate evidence on which the district court based its common sense reasoning appears in the record, namely the facts that step (D) merely involves repeating earlier steps, and that a marketer could repeat those steps, if desired. The district court also adequately explained its invocation of common sense. * * * Thus, this last step, and the claim as a whole, simply recites repetition of a known procedure until success is achieved. * * * If the relevant technology were complex, the court might require expert opinions. * * * Here, however, the parties agreed that ordinary skill in the relevant art required only a high school education and limited marketing and computer experience. No expert opinion is required to appreciate the potential value to persons of such skill in this art of repeating steps (A)-(C). 78 The Federal Circuit also found that the claims were invalid under 103 on the rationale of obvious to try. The court reasoned that the problem the patent addressed was sending too few or too many s to meet a particular marketing quota. There were just a F.3d at 1330, quoting Ball Aerosol & Specialty Container, Inc. v. Ltd. Brands, Inc., 555 F.3d 984, 993 (Fed. Cir. 2009) F.3d at F.3d at

38 few alternatives oversending, resending bounced messages, or identifying new addresses and sending s to those. According to the Federal Circuit, [e]ven without experimentation, simple logic suggests that sending messages to new addresses is more likely to produce successful deliveries than re-sending messages to addresses that have already failed. 79 C. The Graham Findings 1. Scope and Content of the Prior Art a) Claims in Prior Art Patent, and the Doctrine of Claim Differentiation, May be Used to Determine Scope of Disclosure In determining whether there is written description support in the specification, it has often been pointed out that the original claims of a patent application are part of the disclosure. Two Federal Circuit judges now have taken the dubious next step and have used the claims of a prior art patent (it is unknown whether these claims were original claims or not) to interpret the scope of the disclosure for purposes of assessing obviousness and anticipation. In Therasense, Inc. v. Becton, Dickinson & Co., 80 the Federal Circuit panel majority relied heavily on the claims of two reference patents in determining that those patents rendered the claims of two patents-in-suit invalid as being obvious and anticipated. The Federal Circuit panel majority also concluded that the patents-in-suit were unenforceable because of inequitable conduct. Circuit Judge Linn filed a lengthy concurring-in-part, dissenting-in-part opinion dissenting from the finding of inequitable conduct, and criticizing the use of claims in determining what a prior art reference actually discloses. The invalidity holdings will be addressed here. Becton, Dickinson & Co. (BD) originally filed a declaratory judgment action seeking a judgment that it was not infringing two patents (the 164 and 745 patents) now owned by Abbott Diabetes Care, Inc. (successor to Therasense, Inc.). Abbott subsequently sued Bayer Healthcare LLC for infringement of two patents (the 551 and 745 patents), and countersued BD for infringement of all three patents. Abbott also sued Nova Biomedical Corp., BD s supplier, for infringement of all three patents. The cases were consolidated. The district court held on summary judgment that the BD/Nova products did not infringe any claims of the 164 or 745 patents, and that certain claims of the 745 patent were invalid as anticipated by prior art. In a bench trial, the district court held that certain claims of the F.3d at F.3d 1289 (Fed. Cir. 2010)(Opinion by Circuit Judge Dyk, joined by Circuit Judge Friedman, concurring-in-part, dissenting-in-part opinion by Circuit Judge Linn)(appeals from the United States District Court for the Northern District of California in consolidated case nos. 04-CV-2123, 04-CV-3327, 04-CV-3732, and 05-CV-3117, Judge William H. Alsup). 31

39 551 patent were invalid due to obviousness, and that the 551 patent was unenforceable because of inequitable conduct. On appeal, the Federal Circuit panel majority affirmed. The patents-in-suit were drawn to disposable blood glucose test strips that were used in conjunction with glucose meters to measure the level of glucose in a blood sample. Glucose in blood introduced to a test strip reacted with an enzyme on the strip, and transferred electrons to the enzyme. A mediator incorporated on the strip transferred electrons from the enzyme to the active electrode of electrochemical biosensors. The electrons then flowed from the strip into a glucose meter which calculated glucose concentration. Common test strips measured glucose levels in samples of whole blood. However, the electrochemical sensors were also capable of measuring glucose levels in other sample types as well, e.g., blood plasma, fluid between skin cells and organs ( interstitial fluid ), and buffer solutions. Those sensors were also capable of measuring samples in vivo using live blood. Claim 1 of the 551 patent was deemed representative: 1. A single use disposable electrode strip for attachment to the signal readout circuitry of a sensor to detect a current representative of the concentration of a compound in a drop of a whole blood sample comprising: a) an elongated support having a substantially flat, planar surface, adapted for releasable attachment to said readout circuitry; b) a first conductor extending along said surface and comprising a conductive element for connection to said readout circuitry; c) an active electrode on said strip in electrical contact with said first conductor and positioned to contact said whole blood sample; d) a second conductor extending along said surface comprising a conductive element for connection to said read out circuitry; and e) a reference counterelectrode in electrical contact with said second conductor and positioned to contact said whole blood sample, wherein said active electrode is configured to be exposed to said whole blood sample without an intervening membrane or other whole blood filtering member * * *. (emphasis by the court) The claims of the 551 patent thus were drawn to a test strip with an electrochemical sensor for testing whole blood without any membrane over the electrode. Some sensors in the prior art used membranes to control the flow of glucose to the electrode. Other prior art sensors used membranes to prevent fouling, i.e., red blood cells sticking to the active electrode which resulted in inaccurate measurements. Also, prior art sensors injected into the human body for in vivo measurements used membranes as a safety measure to prevent dissolving and fouling. The question vis-à-vis obviousness was whether a prior art 382 patent disclosed a glucose sensor without a membrane for use with whole blood. The district court held that 32

40 the prior art 382 patent disclosed that a membrane was preferred, but optional, in all cases other than live blood. The Federal Circuit agreed. The prior art 382 patent had been filed by one of Abbott s predecessors, and the first two named inventors were also the first two named inventors on the 551 patent-in-suit. In determining what the prior art 382 patent disclosed, the panel majority began by commenting that [t]he claims of a prior art patent are part of its disclosure, citing In re Brenno, 81 As discussed further below, Circuit Judge Linn pointed out in the concurring-inpart portion of his opinion that Brenno did not actually support that proposition. In any event, the panel majority reasoned that [t]he claims of the 382 patent are plainly directed in part to sensors without a membrane, as is made clear by the dependent claims that specifically include a membrane as an additional feature of the device. 82 The panel majority also noted that one disclosed embodiment involved a membraneless sensor for testing interstitial fluid, and Example 8 described tests on strips using a buffer solution both with and without membranes. Abbott did not dispute that the prior art 382 patent broadly claimed membraneless strips, and that the specification disclosed membraneless strips. Abbott, however, argued that in the case of blood, a membrane was required. In rejecting that argument, the panel majority again turned to the claims of the prior art 382 patent and commented that it is significant that none of the claims in the 382 patent explicitly distinguishes between blood and other fluids. Also pertinent is the difference between in vivo sensors and in vitro sensors. In vivo sensors test live blood or other fluids inside the body, while in vitro sensors test fluids such as blood after they have been extracted from the body. Claims 1 17 of the 382 patent cover both in vivo and in vitro sensors; additional claims are limited to in vivo sensors, though again those claims do not distinguish between sensors for blood and other fluids. 83 The specification of the 382 patent also stated: Optionally, but preferably when being used on live blood, a protective membrane surrounds both the enzyme and the mediator layers, permeable to water and glucose molecules. The panel majority concluded that contradicted Abbott s argument. Nevertheless, Abbott argued that one of ordinary skill in the art would not have read the prior art 382 patent literally to mean that a membrane was not necessary with blood. Abbott s expert testified that one of ordinary skill in the art in time frame of the 382 patent (1983) would have thought that a membrane was necessary when testing whole blood because of the risk of fouling. Bayer s expert witness, on the other hand, distinguished in vivo from in vitro testing, and testified that a membrane would not have been considered necessary for in vitro testing. The district court credited Bayer s witness. The panel majority concluded that did not constitute clear error F.2d 1340, 1346 (Fed. Cir. 1985) F.3d at F.3d at

41 The district court also held on summary judgment that certain claims of the 745 patent were anticipated by a published PCT application (the 225 reference). The underlying question was whether the 225 reference taught diffusible mediators. The 225 reference contained the same disclosure as the 164 patent-in-suit. The 225 reference described a glucose sensor for blood samples smaller than one microliter. The specification of the 225 reference disclosed, inter alia, that [a] diffusing or leachable (i.e., releasable) redox mediator is not desirable when the working and counter electrodes are close together * * *. The panel majority concluded that the plain meaning of that portion of the specification implied that diffusible mediators were contemplated, but not preferred. According to the panel majority, that conclusion was reinforced by the claims: This conclusion is reinforced by the claims of the 225 reference. Claim 127 of the reference describes a method calling for a redox mediator. It does not specify whether this mediator is a leachable or a non-leachable mediator that is, diffusible or non-diffusible. Claim 128, however, encompasses [t]he method of claim 127, wherein the redox mediator is a non-leachable redox mediator, i.e., a non-diffusible mediator. * * * Here, where the dependent claim adds only the non-leachable (non-diffusible) mediator limitation, this principle of claim construction [claim differentiation] compels the conclusion that the 225 reference claims diffusible as well as non-diffusible mediators in claim 127. As discussed above, the claims here must be considered part of the disclosure. 84 Accordingly, the panel majority concluded that summary judgment was proper. Circuit Judge Linn, in the concurring-in-part portion of his opinion, found that the written description portions of the prior art 382 and 225 patents were sufficient to invalidate the asserted claims, and sharply criticized the use of claims in determining what a prior art reference actually discloses. Judge Linn noted that although the claims of the prior art 382 and 225 patents are broad enough to cover a membraneless sensor and a diffusible redox mediator, respectively, those structures are not specifically recited in the claims but instead are disclosed in the descriptive portions of the specification. (emphasis by J. Linn) 85 Judge Linn further noted that Benno, cited by the panel majority for the proposition that patent claims may be used in determining the scope of disclosure, actually held to the contrary, i.e., the court in Benno wrote that [t]he scope of a patent s claims determines what infringes the patent; it is no measure of what it discloses F.3d at F.3d at F.3d at 1324, quoting Benno, 768 F.2d at

42 The panel majority, Judge Linn noted, quoted from Benno that: [I]t is true * * * that a claim is part of the disclosure * * *, however, the internal quotation was attributed to the PTO Solicitor and takes the quote out of context. The court s full quotation, Judge Linn notes, reads: Samuel F.B. Morse, the inventor of the telegraph, had a patent thereon, issued in 1840, containing a claim (which the Supreme Court held invalid) which was broad enough to read on the modern Telex. By the board s reasoning, Morse s telegraph patent therefore would have made the Telex obvious. The scope of a patent s claims determines what infringes the patent; it is no measure of what it discloses. A patent discloses only that which it describes, whether specifically or in general terms, so as to convey intelligence to one capable of understanding. While it is true, as the Solicitor suggested at oral argument, that a claim is part of the disclosure, that point is of significance principally in the situation where a patent application as filed contains a claim which specifically discloses something not disclosed in the descriptive part of the specification (claims being technically part of the specification, 35 USC 112, 2d par.), in which case the applicant may amend the specification without being charged with adding new matter, within the meaning of 132. But that is not the situation here. Danti s claim 1 does not disclose any structure additional to what the Danti specification discloses. 87 The court in Benno ultimately reversed the board s rejections over the prior art Danti patent. Judge Linn further noted that the two other cases cited by the panel majority, In re Smolak, 88 and Gabrielidis v. Prince Sports Group, Inc., 89 similarly did not hold that the claims of a prior art patent could be used to determine the scope of disclosure F.3d at 1325, quoting Benno, 768 F.2d at 1346 (emphases added; internal citations omitted) F.2d 838, 840 (CCPA 1937) WL , at *7 (Fed. Cir. Nov. 1, 2000) (nonprecedential). 35

43 b) Board s Erroneous Interpretation of Reference Cannot Be Harmless Error In In re Chapman, 90 the technology involved divalent antibody fragments. Antibodies bind to antigens to inactivate them as part of an immune response. Antibodies are Y shaped having two identical light chains and two identical heavy chains: The two chains are linked by disulphide bridge denoted as S-S. The two arms are also linked by disulphide bridges. Such bridges are formed by a covalent bond. Variable regions at the upper end of each branch of the Y are where the antibody binds to antigens F.3d 1330 (Fed. Cir. 2010)(Opinion by Circuit Judge Dyk, joined by Circuit Judges Gajarsa and Clevenger)(appeal from the United States Patent and Trademark Office, Board of Patent Appeals and Interferences). 36

44 For several reasons, antibody fragments were preferable for diagnostic and therapeutic uses over whole antibodies. Antibody fragments were produced by using certain enzymes that cut the antibody below the arms of the Y thus removing the stem to generate a F(ab )2 fragment: A F(ab )2 fragment consisted of two Fab fragments, linked at the hinge regions, and was dumbbell-shaped. It was described as divalent because there were two antigen binding sites, one at the end of each arm. A Fab fragment was designated as Fab when it had at least one cysteine residue in the hinge region of the fragment. A Fab fragment was designated as Fab -SH when the cysteine residue(s) had a free thiol (-SH) group. Chapman s application was drawn to divalent antibody fragments having two antibody heavy chains and at least one polymer molecule attached to the heavy chains. Chapman disclosed combining two separate Fab fragments with their light chains removed using a bridge that contained at least one covalently linked polymer. Claim 1 was deemed representative: 1. A divalent antibody fragment comprising [a] two antibody heavy chains and [b] at least one polymer molecule effective for increasing the circulating halflife of said fragment in covalent linkage, [c] each heavy chain being covalently linked to the other by at least one nondisulphide interchain bridge linking the sulphur atom of a cysteine residue in one chain to the sulphur atom of a cysteine residue in the other chain, said cysteine residues being located outside of the variable region domain of each chain, characterised in that the at least one non-disulphide interchain bridge contains the at least one covalently linked polymer molecule. 37

45 The intervening polymer was described as effective for increasing the circulating half-life of the antibody fragment. Chapman s invention achieved a circulating half-life that was intermediate between that of an individual fragment and a whole antibody. A prior art patent to Gonzalez disclosed linking antibody fragments to a polymer to increase the antibody s half-life for therapeutic purposes. The examiner rejected certain of Chapman s claims under 102(e) as anticipated by, or, alternatively, under 103 as having been obvious over Gonzalez. The examiner also rejected certain claims under 103 as having been obvious over Gonzalez in view of another reference. The examiner made certain factual findings which the board adopted. Four of those were: [FF] 3. The antibody can be a monovalent Fab fragment, a monovalent Fab fragment which includes one or more cysteine residues in the constant region, or an F(ab )2 antibody fragment which has a hinge cysteine between the Fab fragments * * *. * * * * * [FF]7. Gonzalez also describes conjugates containing a F(ab ) 2 antibody fragment in which the polymer is attached between the disulphide bridge that would ordinarily link the heavy and lights [sic] chains * * *. In this embodiment, the polymer is attached to a cysteine in the light or heavy chain; the cysteine in the opposite chain is replaced with another amino acid to avoid forming a disulphide bond between the chains * * *. [FF]8. In another embodiment, Gonzalez describes antibody conjugates in which a polymer molecule is used to link together two antibody fragments to form a dumbbell-shaped structure... [sic] Such structures can be made by using a polymer molecule derivatized with multiple functional groups permitting the direct attachment, or the attachment by means of bi- or multifunctional linkers, of two or more antibody fragments to the polymer backbone. * * *. * * * * * [FF]12. In regard to the obviousness of the claimed structure, the Examiner states there are explicit teachings of a dumbbell-shaped structure (FF 8) and a Fab conjugated to PEG in the hinge region via a cysteine residue (FF 6). The board reversed the examiner s anticipation rejection because picking and choosing would have been necessary to have arrived at the antibody structure of claim 1, but affirmed the examiner s conclusion that the claims would have been obvious over Gonzalez. The primary issue on appeal was the accuracy of the board s description of Gonzalez. Chapman argued that three of the board s factual findings vis-à-vis Gonzalez were not supported. The PTO agreed that the board s opinion included three erroneous statements, but urged that those statements were harmless. The APA includes a harmless error rule, i.e., 5 U.S.C. 706 provides that due account shall be taken of the rule of prejudicial error. The Federal Circuit has held that 38

46 the harmless error rule applies to appeals from the Board just as it does in cases originating from district courts. 91 The Federal Circuit has also held [t]he correction of an error must yield a different result in order for that error to have been harmful and thus prejudice a substantial right of a party. 92 Chapman argued that the board s statement the Examiner finds Gonzalez teaches a dumbbell-shaped antibody structure comprised of two monovalent Fab fragments (FF 8, 12) and describes linking them via a polymer molecule, was error because Gonzalez did not teach linking two monovalent Fab fragments * * * via a polymer. The PTO agreed Gonzalez did not contain that disclosure. Although that statement was wrong, findings 8 and 12 were correct. The PTO argued that error was harmless because the board had not based its obviousness rejection on that statement, but was describing the examiner s position albeit erroneously. The Federal Circuit agreed that the board had not relied on such a disclosure in Gonzalez. The second error arose in connection with FF 7. The board stated that Gonzalez describes a divalent antibody in which the polymer is linked between light and heavy chains and only one cysteine residue is present. FF 7 stated that Gonzalez described conjugates containing an F(ab )2 antibody fragment in which the polymer is attached between the disulphide bridge that would ordinarily link the light and heavy chains. Chapman argued that the examiner and the board had misunderstood Gonzalez s actual disclosure which, according to Chapman, did not describe the polymer as serving as a link between the light and heavy chain, but rather that it was attached to either the light or heavy chain. The PTO conceded at oral argument that Chapman was correct. The third error concerned FF 3. The board said that [t]he antibody can be a monovalent Fab fragment, a monovalent Fab fragment which includes one or more cysteine residues in the constant region, or an F(ab )2 antibody fragment which has a hinge cysteine between the Fab fragments. The PTO conceded, however, that Gonzalez taught six different possible antibody fragments: F(ab), F(ab ), F(ab )-SH, F(ab ) 2, scf v, and F v. FF 3 was incorrect because Gonzalez disclosed more than three choices for an antibody segment. The Federal Circuit concluded that the second and third errors were not harmless because they increase the likelihood that Chapman was erroneously denied a patent on grounds of obviousness. If the Board based its decision on a misunderstanding of Gonzalez, its conclusions regarding obviousness are called into question. With respect to the second error, the Board was mistaken as to whether Gonzalez teaches the use of a polymer to link the light and heavy chains in a F(ab )2 fragment in the cited embodiment. Therefore, Chapman s use of a polymer to link together two F(ab ) fragments may be less likely to be obvious. Further, as to the third error, if the Board did not appreciate the full scope of antibody fragments disclosed in Gonzalez, we cannot be confident about its ultimate conclusion that the selection of one of them to form Chapman s molecule is obvious, as it appears that there are more possibilities from which to choose. Because we cannot say with 91 In re Watts, 354 F.3d 1362, 1369 (Fed. Cir. 2004). 92 Munoz v. Strahm Farms, Inc., 69 F.3d 501, 504 (Fed. Cir. 1995). 39

47 confidence that the Board would have reached the same conclusion in the absence of these errors, we are persuaded they are indeed harmful. 93 c) Genuine Disputes Over The Scope and Content of the Prior Art May Preclude Summary Judgment: Twice Signing a Party s Proposed Findings of Fact and Conclusions of Law Without Change, and Being Twice Reversed Warrants Reassigning the Case to a Different District Judge In TriMed, Inc. v. Stryker Corp. (TriMed II), 94 TriMed s patent-in-suit was drawn to an implantable device used to set bone fractures, such as a type of wrist fracture known as a Colles fracture. The device is illustrated below: The device used screws, pins, and a plate with screw holes on one end of the plate and pin holes on the opposite end thereof. The device allowed rigid fixation of fracture fragments while allowing some motion of a joint. In a first appeal, TriMed, Inc. v. Stryker Corp. (TriMed II), 95 the district court judge, Judge Manuel L. Real, granted Stryker s motion for summary judgment of non-infringement by simply signing Stryker s Statement of Uncontroverted Facts and Conclusions of Law. The Federal Circuit reversed finding that the district court had improperly construed a limitation. On remand, Stryker moved for summary judgment of invalidity based on two technical articles and a German published application. TriMed responded, according to the Federal Circuit, contesting nearly every aspect of Stryker s motion for summary judgment, including the teachings of the cited references. Judge Real again simply signed Stryker s Uncontroverted Statement of Facts and Conclusions of Law without any changes other than crossing out an anticipation section and granted summary judgment of invalidity in favor of Stryker F.3d at F.3d 1333 (Fed. Cir. 2010)(Opinion by Circuit Judge Linn, joined by Circuit Judges Lourie and Moore)(appeal from the United States District Court for the Central District of California in case no. 06-CV- 1918, Judge Manuel L. Real) F.3d 1256 (Fed. Cir. 2008). 40

48 The Federal Circuit again reversed and remanded. The Federal Circuit noted that [s]ummary judgment of obviousness is appropriate if the content of the prior art, the scope of the patent claim, and the level of ordinary skill in the art are not in material dispute, and the obviousness of the claim is apparent in light of these factors. 96 Here, however, the Federal Circuit noted that several disputes between the parties over what the prior art actually disclosed foreclosed summary judgment. The Federal Circuit also concluded that the case must be reassigned to a different district court judge: The district court has now been reversed twice after entering summary judgment against TriMed, in both instances simply signing Stryker s proposed statement of law and facts relevant to the decided issues, a disfavored practice in the Ninth Circuit, * * *. Although mindful of the burden reassignment places on judicial resources, given the particular circumstances present here, we are convinced that reassigning this matter to a different judge is necessary to preserve the appearance of justice Differences Between the Prior Art and the Claimed Invention a) Claim Construction i. Claim Construction May Result in Genuine Issues of Material Fact Precluding Summary Judgment In Source Search Technologies, LLC v. LendingTree, LLC, 98 Source Search Technologies (SST s) patent-in-suit was drawn to a computerized procurement service that matched potential buyers with potential vendors over a network, e.g., the Internet. In brief, a buyer would submit a request for quotation (RFQ) for goods or services that was broadcast over a network to vendors. The vendors receiving the RFQ were selected based on criteria set by the buyer, seller, or network. The selected vendors then transmitted responses to the RFQ to the network which communicated the responses to the buyer. LendingTree operated a website that referred prospective borrowers to potential lenders of various home, auto and personal loans. Prospective borrowers filled out a qualification form (QF) on a website. The website then used information from lenders and from the QF to match the prospective borrowers with prospective lenders. When a lender responded with a loan offer, the website sent the details of the offer to the prospective borrower F.3d at 1341, quoting KSR Int l Co. v. Teleflex Inc., 550 U.S. 398, 427 (2007) F.3d at F.3d 1063 (Fed. Cir. 2009)(Opinion by Circuit Judge Rader, joined by Circuit Judges Plager and Schall)(appeal from the United States District Court for the District of New Jersey in case no. 04-CV-4420, Senior Judge Dickinson R. Debevoise). 41

49 The only claim at issue on appeal was claim 14, which was dependent from claim 13, which in turn was dependent on claim 12: 12. A method of purchasing goods or services over a data network comprising the steps of: - Communicating over said data network, to a filter means, at least one request for a quotation from a potential buyer of said goods or services; filtering, at said filter means the at least one request in order to ascertain a set of sellers potentially capable of supplying said goods or services; and - Obtaining, from at least one of said potential sellers, over a data network, quotes to supply said goods or services, and forwarding said quotes to said potential buyer, wherein at least part of the quote information is stored at a location remote from said filter means. 13. The method of claim 12 further comprising the step of accepting filtering conditions from said potential buyer, and utilizing said filtering conditions from said potential buyer, and utilizing said filtering conditions in said step of filtering to determine a subset of potentially capable sellers. 14. The method of claim 13 wherein said set is limited by said filter conditions and by a predetermined maximum number from which a bid is to be received. The district court construed request for a quotation to mean a request for the price and other terms of a particular transaction in sufficient detail to constitute an offer capable of acceptance. Based on that construction, the district court granted summary judgment of infringement, but also summary judgment that the claims were invalid under 103 as having been obvious. On appeal, the Federal Circuit reversed. The district court had relied on two sets of prior art e-commerce prior art, and bricks and mortar prior art. The e-commerce prior art consisted of a FAST system, and IQUEST system, and the Federal Acquisition Network (FACNET). FAST was a parts-procurement system that accepted requests for quotation from customers, solicited responses from suppliers/vendors, and returned vendor quotes to clients. Of importance to the issue of obviousness, the quotes submitted by vendors were non-binding, inventory availability responses, not contractual offers. That is, vendors were not contractually bound by the responses submitted to the FAST system. Vendors could later reject purchase orders. The IQUEST system was a document-searching system that allowed users to enter queries to locate various publications. The FACNET system allowed government agencies to submit electronic requests for quotes. The system would then solicit vendors to bid on the quotes. The bricks and mortar prior art included home contractor networks that would match homeowners wishing to do home repair or improvement with contractors, and social service networks that matched individuals to providers of various services such as housing, attorney referrals, etc. 42

50 The Federal Circuit concluded that there were genuine issues of material fact that precluded summary judgment of invalidity. Again, the district court s construction of request for a quotation was an offer capable of acceptance. The Federal Circuit noted that in the FAST system, vendors responses were non-binding and were not contractual offers. According to the Federal Circuit, none of the other prior art references filled the gap. Thus, the Federal Circuit rejected LendingTree s argument that the patent-in-suit did nothing more than computerize the bricks and mortar prior art. In simple terms, none of the prior art discloses a qualifying quote that is directly forwarded to a client. 99 ii. Claim Construction Avoids Finding of Obviousness: Court Splits on What the Trial Court s Actual Claim Construction Was In Honeywell Int l, Inc. v. United States, 100 the original panel opinion was later withdrawn in response to a petition for panel re-hearing, and the opinion was revised and reissued to correct the portion of the opinion dealing with the Invention Secrecy Act. The other portions of the opinion were not changed. The Federal Circuit panel majority and Circuit Judge Mayer disagreed over what the Court of Federal Claims had actually held vis-à-vis claim construction. The Federal Circuit panel majority agreed with the CFC s claim construction, but concluded that the CFC had deviated from that construction in finding claims invalid for obviousness. Circuit Judge Mayer disagreed. The patent-in-suit was drawn to night vision goggles (NVG) that were compatible with colored cockpit displays. NVGs operated by amplifying available light, especially light in the long-wavelengths, i.e., red and infrared. Cockpit displays, however, also used red lights for instrument displays that could overwhelm NVGs. It was important, though, to keep red lights for cockpit displays. Prior attempts to solve the problem, including dimming the displays and using various filters, were insufficient because they dimmed the display lights to such a degree that displays were insufficiently illuminated for others in the cockpit who were not wearing NVGs, or those looking under NVGs. Despite the importance of retaining the color red for cockpit displays, in January 1986, the government issued a military specification (MIL-L-85762) that prohibited the use of red light in NVG compatible cockpits. On October 20, 1985, Allied Corporation filed an application (the 269 application) that was drawn to a way of continuing to have red light in NVG compatible cockpits. Pursuant to the Invention Secrecy Act, 35 U.S.C. 181, a Naval Air Systems Command engineer, David McClure, reviewed the application in March 1986 and concluded that a secrecy order should be imposed. McClure served on and later chaired the committee F.3d at F.3d (Fed. Cir. 2010), vacated and replaced, F.3d (Fed. Cir. 2010)(Opinion by Circuit Judge Moore, joined by Circuit Judge Prost, dissenting-in-part opinion by Circuit Judge Mayer)(appeal from the United States Court of Federal Claims in 02-CV-1909, Judge Susan G. Braden). 43

51 charged with revising MIL-L After McClure reviewed the 269 application, the government revised that specification to permit using red light in NVG compatible cockpits. The PTO imposed secrecy orders on the 269 application which prevented a patent from issuing until Allied Corporation eventually became AlliedSignal, Inc., which merged with Honeywell, Inc. to form Honeywell International, Inc. The 269 application ultimately issued as the patent-in-suit. In the invention of the patent-in-suit, displays emitted blue, red, and green light. A combination of filters prevented red light from disrupting vision through NVGs by passing only a narrow range of frequencies of red light from the displays, and another filter at the NVG blocked that narrowband of red light, but passed all other ambient red light: Thus, red warning lights in the cockpit did not disrupt vision through the NVGs, and crew not wearing NVGs could see the lights as well. In 2002, Honeywell filed a complaint seeking compensation under the Invention Secrecy Act for pre-issuance use of the invention, and under 28 U.S.C. 1498(a) for postissuance infringement. The Court of Federal Claims construed disputed terms and conducted a trial on whether three accused systems infringed. The CFC held that all three accused systems infringed claim 2, literally and under the doctrine-of-equivalents, but that claims 1 and 3 (which depended from claim 2) were not infringed. The CFC also held that claim 2 was invalid as having been obvious under 103(a), or alternatively, lacked written description support under 112(1). The CFC further held that Honeywell lacked standing under the Invention Secrecy Act because the patent-in-suit did not issue from an application that was subject to a secrecy order under 181. The CFC yet further held that the first sale doctrine precluded Honeywell from recovering damages for alleged infringing systems used in F-16 aircraft because its predecessor, Honeywell, Inc., had manufactured and sold the alleged infringing systems. The obviousness issue will be discussed here. 44

52 Claim 2 called for: 2. A display system for use in association with a light amplifying passive night vision aid and a local color display including a local source of light having blue, red, and green color bands, comprising: (a) a plurality of filters at the local color display including (1) a first filter for filtering the blue color band of the local source of light; (2) a second filter for filtering the green color band of the local source of light; and (3) a third filter for filtering the red color band of the local source of light and passing a narrowband of the red color band; and (b) a fourth filter which filters light at the night vision aid, said fourth filter cooperating with said plurality of filters to substantially block at least said narrowband of the red color band from being admitted to the night vision aid. The CFC held that claim 2 would have been obvious in light of five references: (1) Uchida an article entitled A Liquid Crystal Multicolor Display Using Color Filters, that was presented at a conference in 1981 in Munich, Germany; (2) Stolov a U.S. patent entitled Multicolor Image or Picture Projecting System Using Electronically Controlled Slides; (3) Boehm a paper entitled The Night Vision Goggle Compatible Helicopter Cockpit, presented at a conference in The Hague, Netherlands, in 1984; (4) Verney an article entitled Aircraft Lighting Systems, and presented at a conference in Fort Worth, Texas, in 1985; and (5) a German patent application published in The CFC held that Uchida and Stolov disclosed the elements of (a)(1) and (2) of claim 2, Boehm disclosed the elements of (a)(3) and (b), Verney disclosed the elements of (a)(3), and the German application disclosed the elements of (b). The CFC concluded that it would have been obvious to combine the teachings of those references. Honeywell argued, inter alia, that Boehm and Verney did not disclose the elements of (a)(3). According to the Federal Circuit panel majority, the CFC construed local color display and color bands in (a)(3) to require perceptible red light, which the parties had disputed. The question of obviousness turned on that construction. The Federal Circuit panel majority agreed that the proper construction of local color display is that it must emit perceptible red light. Furthermore, element (a)(3) is a filter that passes a narrow band of this red light. The claimed invention addressed the need for red warning lights in NVG-compatible cock-pits, and it is inconceivable that an aircraft would use warning lights that are not perceptible to the crew. In other words, there would be no point, in the context of this invention, to pass a narrowband of red light that cannot be seen. The local color display emits perceptible red light, and element (a)(3) requires a narrow band 45

53 of this perceptible red light to pass. We conclude, therefore, that element (a)(3) requires the passing of perceptible red light i.e., red light which is visible to the human eye. 101 According to the Federal Circuit panel majority, however, the CFC deviated from that construction when addressing infringement. The Federal Circuit panel majority construed the CFC s orders as stating that the CFC s claim construction did not require the perception of the red primary of a full color display and instead that the local color display required only that at least one color [be] perceptible. The Federal Circuit panel majority viewed the CFC as basing its obviousness determination on a conclusion that limitation (a)(3), and claim 2 in general, did not require passing perceptible red light. The Federal Circuit panel majority therefore concluded that the CFC s obvious holding could not stand because, in the panel majority s view, neither Boehm nor Verney disclosed passing perceptible red light. Circuit Judge Mayer dissented urging that the panel majority had confused the CFC s holding that claim 2 required perceptible light be emitted within the wavelengths defined as the red color band, with a holding that claim 2 required that light be emitted which was perceived as red. According to Judge Mayer, the CFC held the former, and never the latter. Circuit Judge Mayer concluded, however, that in any event, experts for both Honeywell and the government indicated that it was known how to adjust a light source to increase the perceptibility of light in the red color band while using the filters disclosed in Boehm or Verney. b) Post-KSR Relatively Simple Mechanical Inventions May Be Patentable When Prior Art Teaches Away From the Claimed Invention In Crocs, Inc. v. U.S. Int l Trade Comm n, 102 Crocs, assignee of a utility patent and a design patent drawn to its ubiquitous footwear, filed a complaint against eleven respondents alleging unfair competition under 19 U.S.C. 337, asserting that imported foam footwear infringed those two patents. The respondents made the accused products in Asia and imported them into the United States. Crocs initially filed a motion for summary determination that the design patent was infringed. The respondents filed motions for summary determination of non-infringement. The presiding ALJ granted the respondents motions finding that the accused products did not infringe the design patent. On review, the Commission vacated and remanded the ALJ s initial determination. Following an evidentiary hearing, the ALJ held that the respondents had not violated 337. In particular, the ALJ found that the design patent was not infringed, and that Croc s products did not practice the invention of the design patent, and therefore did not satisfy the technical prong of the domestic industry requirement of 337. The ALJ also found that the asserted claims of the utility patent would have been 101 F.3d at F.3d 1294 (Fed. Cir. 2010)(Opinion by Circuit Judge Rader, joined by Circuit Judges Lourie and Prost)(appeal from the United States International Trade Commission in Investigation No. 337-TA-567). 46

54 obvious over two items of prior art, i.e., the Aqua Clog and a U.S. patent (the Aguerre 249 patent). The obviousness findings will be addressed here. According to the opinion, Croc s utility patent, entitled Breathable Footwear Pieces, issued on February 7, 2006, based on a filing in The asserted claims of the 858 patent, independent claims 1 and 2, were drawn to foam footwear having a foam base section an upper portion ( upper ) and a sole and a foam strap. A pair of connectors tied the foam strap to the base section. That connection created frictional forces that kept the strap in a preferred position at the rear of the base section. Claim 1 of the utility patent provided: 1. A footwear piece comprising: [a] a base section including an upper and a sole formed as a single part manufactured from a moldable foam material; and [b] a strap section formed of a moldable material that is attached at opposite ends thereof to the upper of the base section with plastic direct contact with the moldable material of the base section and pivots relative to the base section at the connectors; [c] wherein the upper includes an open rear region defined by an upper opening perimeter, and wherein frictional forces developed by the contact between the strap section and the base section at the plastic connectors are sufficient to maintain the strap section in place in an intermediary position after pivoting, whereby the strap section lends support to the Achilles portion of the human foot inserted in the open rear region; and [d] wherein the upper includes a substantially horizontal portion and a substantially vertical portion forming a toe region that generally follows the contour of a human foot, wherein the toe region tapers from an inner area of the base section where the larger toes exist to an outer area of the base section where the smaller toes exist; and [e] wherein the sole includes a bottom surface having front and rear tread patterns longitudinally connected by a flat section. (emphasis added by the Federal Circuit) Claim 2 of the utility patent called for: A footwear piece comprising: [a] a base section including an upper and a sole formed as a single part manufactured from a moldable foam material; and [b] a strap section formed of a molded foam material attached at opposite ends thereof to the base section such that the strap section is in direct contact with the base section and pivots relative to the base section; and [c] wherein the upper includes an open rear region defined by an upper opening perimeter; and wherein the sole includes a rear perimeter; and wherein the strap section pivots between a first contact point on the upper 47

55 opening perimeter and a second contact point on the rear perimeter, and wherein frictional forces developed by the contact between the strap section and the base section at the points of attachment are sufficient to maintain the strap section in place in an intermediary position after pivoting whereby the strap section lends support to the Achilles portion of a human foot inserted in the open rear region; and [d] wherein the upper includes a substantially horizontal portion and a substantially vertical portion forming a toe region that generally follows the contour of a human foot, wherein the toe region tapers from the inner area of the base section where the larger toes exist to the outer area of the base section where the smaller toes exist; and [e] wherein a decorative pattern of raised bumps is molded or otherwise created in the upper near to and extending the length of the upper opening perimeter; and [f] wherein a plurality of ventilators are formed in both the substantially vertical portion and the substantially horizontal portion, and wherein the ventilators extend up a majority of the height of the vertical portion; [g] wherein the vertical portion of the upper includes an upper strip, wherein the ventilators are formed in the upper strip, and wherein the upper strip extends from the toe region to the points of attachment for the strap section, and wherein the sole includes a lower strip that parallels the upper strip and is separated by a line that extends from the toe region to a heel of the footwear piece, and wherein the lower strip vertically rises in a direction toward the heel; and [h] wherein the sole includes a bottom surface having front and rear tread patterns longitudinally connected by a flat section without tread patterns bounded by raised side portions; and [i] wherein the sole further includes a top surface having a support base including a raised pattern where a foot contacts the support base. (emphasis added by the Federal Circuit) The primary focus of the Federal Circuit s opinion was reversing the Commission s conclusions vis-à-vis Croc s design patent. The Federal Circuit s opinion holding reversing the Commission s holding vis-à-vis the obviousness of the claims of Croc s utility patent are somewhat scant. What is significant is that this is likely the first post-ksr precedential opinion in which the Federal Circuit held that a primarily mechanical patent drawn to relatively easily understandable technology survived a challenge under 103. To the extent explained in the opinion, the Commission relied on two prior art references to find that the asserted claims of Croc s utility patent would have been obvious: (1) an Aqua Clog, and (2) a prior art Aguerre 249 patent. The Federal Circuit, though, at the outset noted that [t]he [Croc s utility] patent, however, is not simply a combination of 48

56 elements found in the prior art. The [Croc s] invention includes a foam strap riveted to a foam base with direct contact an important part of the combination not in the prior art. 103 According to the Federal Circuit, [t]he record shows that the prior art would actually discourage and teach away from the use of foam straps. An ordinary artisan in this field would not add a foam strap to the foam Aqua Clog because foam was likely to stretch and deform, in addition to causing discomfort for a wearer. The prior art depicts foam as unsuitable for straps. The nature of the problem attaching footwear to the foot required under the prior art a material with enough elasticity around the Achilles tendon to allow give and take as the foot moved in the shoe. A firm inelastic material like foam was likely to cause abrasions at the back of the foot. In addition, foam had another deficient property. 104 Additionally, according to the Federal Circuit, [f]oam, according to the prior art, did not have a good memory, meaning that the stretching of normal use would likely cause the material to elongate or compress. These deformations would defeat the strap long before the normal life span of the footwear combination. Thus, the prior art only used a non-elastic material for attaching footwear in combination with a buckle or another mechanism that could adjust the length of the strap for a comfortable fit and for a reduction in stretching and deformation. Despite the prior art warnings against inelastic and non-adjustable foam straps, the 858 patent employed foam without a buckle or some other similar adjustment mechanism. Moreover the 858 patent riveted the inelastic foam directly to the base of the footwear. This claimed feature defied the prior art s caution against the poor characteristics of a foam strap. Indeed no prior art reference disclosed a foam strap riveted to a shoe. The Aguerre 249 patent taught elastic straps or straps made of other flexible materials. In Aguerre, these flexible straps attached a light sandal to the foot. Aguerre 249 patent col.7 ll The Federal Circuit noted that: The record shows that Crocs s expert testified that artisans of ordinary skill in this art thought that foam shoe components connected through perforations such as by stitching or riveting were excessively prone to tearing. To minimize this record evidence, the Commission relied on In re Gurley, in which this court stated that a known or obvious composition does not become patentable simply because it has been described as somewhat inferior to some other product for the same use. 27 F.3d 551, 553 (Fed. Cir. 1994). In this case, however, foam straps were not simply somewhat inferior. Rather the prior art showed that foam was an unsuitable material for shoe straps. Although known in the art, foam was known as unsuitable. The Commission unreasonably determined that foam straps were known in the art without acknowledging that those prior art references rendered the material out of place for use as a strap. Thus, the Commission could F.3d at F.3d at F.3d at

57 not properly conclude that a person of ordinary skill would use foam to attach a foam base portion to a wearer. 106 The Federal Circuit also added limits to what may be considered logical : The Commission also held that choosing foam as the material for a strap for a shoe that is otherwise made of foam is a logical modification because it produces a shoe of uniform composition. To the contrary, a foam strap is not a logical modification because foam was known to be an unsuitable material that was prone to tearing. One of ordinary skill would have no reason to use foam straps in combination with a foam base portion. Thus, the new combination would not have been obvious at the time of the invention of the 858 patent. 107 The Federal Circuit added that: Even if the 858 patent were a combination of known elements according to their established functions which it is not as foam straps were not in the prior art it yields more than predictable results; thus, it is non-obvious. * * * The passive restraint system employed by the 858 patent requires that: (1) the strap section is in direct contact with the base section, and (2) frictional forces developed by the contact between the strap section and the base section at the points of attachment are sufficient to maintain the strap section in place in an intermediary position after pivoting, whereby the strap section lends support to the Achilles portion of a human foot. * * * The specification further describes the passive restraint system of the invention. (quotation from the specification omitted) 108 In a nutshell, the Federal Circuit concluded that the prior art did not render the claims of Croc s utility patent invalid under 103 as having been obvious. D. Obviousness Analysis of Design Patents 1. Durling Analysis, i.e., Finding a Primary Reference Having design characteristics of which are basically the same as the claimed design, and Secondary References so related [to the primary reference] that the appearance of certain ornamental features in one would suggest the application of those features to the other Continues to Control The Federal Circuit s opinion in Titan Tire Corp. v. Case New Holland, Inc., 109 is important for three reasons. First, although the subject matter was a design patent, the F.3d at F.3d at F.3d at F.3d 1372 (Fed. Cir. 2009)(Opinion by Circuit Judge Plager, joined by Circuit Judges Newman and Gajarsa)(appeal from the United States District Court for the Southern District of Iowa in case no. 4:07-CV , Judge James E. Gritzner). 50

58 opinion is a tutorial on the analysis required by district courts in assessing the likelihood of success prong of the four preliminary injunction questions. Specifically, the Federal Circuit explained its analysis in Genentech, Inc. v. Novo Nordisk, A/S, 110 concerning whether the accused infringer had raised an invalidity defense that raises a substantial question of invalidity. Second, and related thereto, Circuit Judge Newman has consistently dissented in cases where preliminary injunctions have been denied on the basis that the accused infringer has shown a substantial question of invalidity. In Judge Newman s view, that analysis did account for the statutory presumption of validity under 282. Judge Newman, in Titan, did not dissent meaning, apparently, that Circuit Judge Plager s opinion satisfied her analysis. Thirdly, the opinion addresses the analysis of obviousness in the context of design patents following the en banc decision in Egyptian Goddess, Inc. v. Swisa, 111 which, although by its terms dealt only with the question of infringement, nevertheless potentially impacts on the obviousness analysis as well as the Federal Circuit explained. Also, the court raised but then sidestepped the impact, if any, of the Supreme Court s opinion in KSR International Co. v. Teleflex, Inc., 112 on the analysis of obviousness in the context of a design patent. The issue of obviousness will be addressed here. In a nutshell, Goodyear Tire & Rubber Co. owned a design patent on a tractor tire design. Titan was a licensee having the right to enforce the patent. Titan (along with Goodyear) sued Case New Holland ( Case ) for infringement, and moved for a preliminary injunction. The district court denied the injunction finding: (1) Titan was likely to succeed in showing infringement, (2) Titan was likely to succeed in withstanding Case s challenge to validity based on its argument that the design was primarily functional, but (3) Titan was not likely to withstand Case s challenge to validity based on obviousness. The district court found that the other preliminary injunction factors irreparable harm, balance of hardships, and public interest weighed in favor of a preliminary injunction, but nevertheless denied the injunction concluding that the lack of likelihood of success on the obviousness issue was sufficient to support that denial. On appeal, the Federal Circuit affirmed F.3d 1361, 1364 (Fed. Cir. 1997) F.3d 665, (Fed. Cir. 2008) (en banc) U.S. 398 (2007). 51

59 The design patent-in-suit claimed the following design: Case relied on three different prior art references in asserting obviousness. The Federal Circuit concluded that two of the prior art references had design characteristics that [were] basically the same as those of Titan s patented design, a tire tread with interlocking lugs having two bent rib portions that extend diagonally in the same direction of travel toward the tire s centerline and culminate in enlarged, multi-sided lug heads that are closely spaced and extend slightly over the centerline: 113 In Durling v. Spectrum Furniture Co., 114 the Federal Circuit explained that the ultimate inquiry under section 103 is whether the claimed design would have been obvious to a designer of ordinary skill who designs articles of the type involved. That, according to the court, inquires whether one of ordinary skill would have combined teachings of the prior art to create the same overall visual appearance as the claimed design. 115 In terms of analysis, one must find a single reference, a something in existence, the design characteristics of which are basically the same as the claimed design. 116 Then other secondary references may be used to modify it to create a design that has the same overall visual appearance as the claimed design. 117 Those secondary references must be so F.3d at F.3d 100, 103 (Fed. Cir. 1996). 115 Id. 116 Id. 117 Id. 52

60 related [to the primary reference] that the appearance of certain ornamental features in one would suggest the application of those features to the other. 118 Titan argued that the district court had erred in not identifying a primary reference. The Federal Circuit noted that while true, the district court had based its obviousness analysis on Durling. The Federal Circuit concluded that the district court would have been entitled to use any of the prior art references as a primary reference. The district court had also considered supplemental designs presented by Case in two affidavits that included pictures from tire catalogs. According to the Federal Circuit, the district court was entitled to consider those as second references, although the district court had not used that phrase. The district court had considered Titan s argument that none of the prior art designs used hexagonal lug heads. However, according to the Federal Circuit, at least one secondary reference does appear to have enlarged, six-sided lug heads, and therefore qualifies as a secondary reference for modifying one of the primary references to create a design with the same overall visual appearance as the design [of the patent-insuit]. 119 The Federal Circuit then commented on the impact of Egyptian Goddess. In particular, the Federal Circuit commented that: This process, first finding a primary reference in the prior art and then modifying it with secondary prior art references to demonstrate the claimed design s obviousness, may have a tendency to draw the court s attention to individual features of a design rather than the design s overall appearance. In this respect, it is similar to the point of novelty test that until recently was used in the infringement side of design patent law. The point of novelty test required a trial court to examine the prior art and the claimed design, identify one or more points of novelty that distinguished the claimed design from the prior art, and then determine whether those points of novelty were included in the accused design, a sometimes contentious analysis. * * * One perceived problem with the point of novelty test was that it might cause the court to focus on whether the accused design has appropriated a single specified feature of the claimed design, rather than on the proper inquiry, i.e., whether the accused design has appropriated the claimed design as a whole. 120 The court held that [i]n Egyptian Goddess, * * * this court abrogated the point of novelty test, along with all of its various ramifications that had accreted over the years, and held that the ordinary observer test is the controlling test for design patent infringement. * * * By eliminating the point of novelty test for infringement, this court returned the focus of the infringement inquiry to a comparison of the designs as a whole from the perspective of an 118 Id F.3d at F.3d at

61 ordinary observer, while at the same time recognizing that the background prior art may provide context for this analysis. 121 The Federal Circuit noted that the court in Egyptian Goddess had said that the test adopted therein was solely as a test of infringement. Nevertheless, the court commented here that it is not clear to what extent, if any, the doctrine applicable to obviousness should be modified to conform to the approach adopted by this court in Egyptian Goddess. 122 The court concluded, however, that was not an issue that required a decision here. The Federal Circuit noted that the district court had applied the Durling analysis and had concluded that Titan had not shown a likelihood of success on the merits because there was a substantial question of validity a conclusion shared by the Federal Circuit. Titan also argued that the district court had erred by referring to KSR and the predictable use of prior art elements according to their established functions, 123 because design patents have no functional elements. The Federal Circuit responded that the district court had not relied on KSR. In any event, the Federal Circuit commented that it is not obvious that the Supreme Court necessarily intended to exclude design patents from the reach of KSR. With or without KSR, we are not persuaded that the trial court abused its discretion in determining that Titan is unlikely to succeed on the merits of the validity issue. 124 E. Secondary Considerations 1. Industry Acceptance a) Evidence of Industry Acceptance, and Copying Coupled With the Accused Infringer s Touting of Advantages of the Invention is Inconsistent With Allegations of Obviousness In Power-One, Inc. v. Artesyn Technologies, Inc., 125 the Federal Circuit affirmed the district court s claim construction as well as a jury verdict that Power-One s patents-in-suit, drawn to power supply systems that use regulators to supply power to components and devices in an electronic system, were infringed and not invalid under 103(a) for obviousness. The claims called for point-of-load (POL) regulators. The district court rejected Artesyn s argument that the term was indefinite under 112(2), and construed the term to F.3d at F.3d at KSR, 550 U.S. at F.3d at F.3d 1343 (Fed. Cir. 2010)(Opinion by District Judge Kendall, Northern District of Illinois, sitting by designation, joined by Chief Judge Michel, and Circuit Judge Gajarsa)(appeals from the United States District Court for the Eastern District of Texas in case No. 2:05-CV-463, Magistrate John D. Love). 54

62 mean: [A] dc/dc switching voltage regulator designed to receive power from a voltage bus on a printed circuit board and adapted to power a portion of the devices on the board and to be placed near the one or more devices being powered as part of a distributed board-level power system. The Federal Circuit rejected Artesyn s argument on appeal that the district court s claim construction was itself indefinite because of the phrase adapted to and the word near. The Federal Circuit noted that [c]laims using relative terms such as near or adapted to are insolubly ambiguous only if they provide no guidance to those skilled in the art as to the scope of that requirement. The Federal Circuit found that the specifications of the patents-in-suit provided the background necessary to understand the scope of adapted to and near. Regarding obviousness, Artesyn had relied on seven items of prior art. Both parties, the Federal Circuit noted, presented their obviousness arguments through testimony by their respective experts. The Federal Circuit commented that: The jury heard conflicting testimony on whether the 125 patent was obvious in light of the prior art. In evaluating the evidence, the jury was free to disbelieve Artesyn s expert, Mr. Neal Stewart * * *, who gave testimony that the scope of the prior art was broad and the differences between the prior art and the invention claimed in the 125 patent were minor, and credit Power-One s expert, Dr. Mark Ehsani * * *, who opined that a person of ordinary skill in the art would not have considered the invention disclosed in the 125 patent obvious, and who cited significant differences between the prior art and the claimed invention. More specifically, Ehsani opined that no prior art reference, or combination thereof, teaches the use of a serial data bus to exchange bidirectional information between a system controller and a plurality of POL regulators for the flexible sending and receiving of control, programming and monitoring information. In the end, the jury credited Power-One s expert, Ehsani. 126 The Federal Circuit also rejected Artesyn s argument that because all of the elements of the invention were known in the prior art also because a patent composed of several elements is not proved obvious merely by demonstrating that each of its elements is, independently, known in the prior art. 127 The Federal Circuit noted that Stewart s testimony did not provide a plausible rational why the prior art references would have worked together to render the claims obvious. The Federal Circuit also noted that there were secondary considerations that supported a finding of non-obviousness. The first was that Artesyn had produced its own infringing product which it touted as enab[ling] the customer to communicate, configure and monitor a variety of different converter functions which in the past was just not an option or required separate and specialized silicon for this to be achieved. The Federal Circuit reasoned that Artesyn s position that Power-One s invention was obvious is inconsistent with its position that its own infringing product was an advancement in the industry F.3d at F.3d at 1352, quoting KSR, 550 U.S. at F.3d at

63 Also, the Federal Circuit noted, Power-One had presented evidence of industry praise for the invention that specifically related to the features of the claimed invention. Lastly, the Federal Circuit noted that Power-One presented sufficient evidence for a jury to conclude that Artesyn copied its patented invention, a factor to be considered as a secondary consideration when determining obviousness Commercial Success a) An Invention May Be Commercially Successful Even Though It Was Never Sold by the Patentee In Rolls-Royce, PLC v. United Technologies Corp., 130 the issue of obviousness arose in the context of an interference and determining whether there was an interference-in-fact. An interference-in-fact exists if the subject matter of a claim of one party would, if prior art, have anticipated or rendered obvious the subject matter of a claim of the opposing party and vice versa. 131 The board declared an interference between UTC s application and Rolls-Royce s patent. UTC was senior party. Rolls-Royce filed a preliminary motion contending there was no interference-in-fact. The board denied that motion. The Eastern District of Virginia, however, in an appeal under 146 held that the claims of Rolls-Royce s patent were patentable over UTC s application and therefore there was no interference-in-fact. On appeal, the Federal Circuit affirmed. The technology involved swept fan blades in turbofan jet engines. Two types of shock waves were produced when such blades rotated in an engine enclosure endwall shock and passage shock. Those shock waves contributed to engine noise and inefficiency. The inventions were directed at reducing those shock waves. Each fan blade had three regions an inner, an intermediate, and an outer region. The count defined a fan blade with a swept-forward inner region, a swept-rearward intermediate region, and forward-leaning outer region. Claim 23 of UTC s application called for: the outer region being translated forward relative to a leading edge with the same sweep angle as an outward boundary of the intermediate region to provide a sweep angle that causes the blade to intercept the shock. The highlighted terms were the principally construed terms F.3d at F.3d 1325 (Fed. Cir. 2010)(Opinion by Circuit Judge Rader, joined by Chief Judge Michel, and Circuit Judge Schall)(appeal from the United States District Court for the Eastern District of Virginia in case no. 1:05- CV-362, Judge Leonie M. Brinkema) C.F.R (a). See also, Medichem, S.A. v. Rolabo, S.L., 437 F.3d 1157, 1161 (Fed. Cir. 2006). 56

64 The district court construed translated forward to mean moved axially forward in the direction of the working medium. On appeal, the Federal Circuit construed translated forward to mean moved forward toward the axial direction based on the claim language and the specification. UTC urged a broader claim construction based, inter alia, on Fig. 5. The Federal Circuit rejected that broader construction even though it resulted in a construction that did not cover Fig. 5: This court s construction of translated forward ( moved forward toward the axial direction ) excludes the embodiment in Figure 5. Although reluctant to exclude an embodiment, this court must not allow the disclosed embodiment to outweigh the language of the claim, especially when the court s construction is supported by the intrinsic evidence. * * * In this case, this court cannot allow the claim to encompass both the embodiment in Figures 1 through 3 (with movement toward the axial direction) and the embodiment in Figure 5 (with movement toward the circumferential direction). A claim construction that embraced both alternative embodiments would be unreasonable because the single claimed direction forward would then encompass two directions at right angles to each other. 132 The district court construed a sweep angle that causes the blade to intercept the shock to mean a sweep angle in the outer region that is constant or decreasing. The Federal Circuit construed a sweep angle that causes the blade to intercept the shock to mean a rearward sweep angle in the outer region that is constant or decreasing because, according to the Federal Circuit, the specification supported only rearward sweep. With respect to obviousness, UTC argued that forward sweep in the outer region would have been an easily predictable and achievable variation in view of the disclosure of rearward sweep in UTC s application. The Federal Circuit disagreed, however, and concluded that the record contained no evidence that would have suggested to or motivated an ordinarily skilled artisan to sweep the fan blade forward in the outer region. The Federal Circuit reasoned that [t]he important question is whether the invention is an identified, predictable solution and an anticipated success. * * * In this case, the broad selection of choices for further investigation available to a person of ordinary skill included any degree of sweep. * * * Also, the record does not show that one of ordinary skill in the art would have any reason to try forward sweep in the outer region at all. A particular course or selection is not obvious to try unless some design need or market pressure or other motivation would suggest to one of ordinary skill to pursue the claimed course or selection. 133 The Federal Circuit also found objective evidence weighing against a finding of obviousness. At the time, there was a need for ever quieter, more fuel efficient engines. During the development of the inventions, the swept fan blade concept was highly promising, but, according to the court, remained an experimental concept and had never been included in feasible, commercially-sold engines. Swept fan blades became unstable during operation, teaching away from their use F.3d at F.3d at

65 Rolls-Royce built a blade that was the physical embodiment of claims in its patent corresponding to the count. A computer analysis of the blade predicted an improved efficiency of 1.8 percent. Internal Rolls-Royce reports and testimony was to the effect that in the industry, a half a percent was considered a huge gain, and 1.8 percent was considered phenomenal. The district court further found that the major breakthrough was that this efficient design, unlike the prior art, was also stable due to the forward sweep of the blade at the tip. Also, it was undisputed that Rolls-Royce s Trent 8104 engine, that incorporated the claimed technology, was the first commercially available engine having fan blades with forward-rearward-forward sweep. The district court found that Rolls-Royce had satisfied a long-felt need in the industry through the Trent 8104 for a feasible highly swept fan blade engine having the characteristics of high efficiency, low noise, and stability. Also, there was commercial acclaim. The Trent 8104 engine won the prestigious Flight International Award in Propulsion at the International Paris Air Show. The award recognized specifically the unique fan blade in the Trent The Trent 8104 swept fan blades were also featured on the cover of the January/February 1999 edition of Flight International with the caption Trent Sweeps to Higher Thrust. Rolls-Royce s Vice President of Marketing testified that it is quite rare for engines to actually appear on the cover of this sort of magazine. It is usually aircraft. Internally, Rolls-Royce awarded the patent s inventor and his colleague (2 out of some 35,000 Rolls-Royce employees) its 1999 Chairman s Award for Innovation for their work on the fan blade incorporating the invention. The Federal Circuit noted that [a]lthough Rolls-Royce never sold the Trent 8104 engine, that engine was the first commercially available engine with highly swept fan blades. After public awareness of the Trent 8104, the rest of the industry quickly came out with similar versions of the highly swept fan blade engines. Today, the forward-rearward-forward is the industry standard for large civil aircraft engines. Rolls-Royce s design has been commercially successful. Moreover, Rolls-Royce s individual market share for swept fan blade engines exceeds 50 percent. 134 The Federal Circuit concluded that Rolls-Royce had established the required nexus between engine sales and the invented fan blade design. The secondary considerations cement the district court s conclusion of non-obviousness F.3d at F.3d at

66 II. DOUBLE PATENTING A. Terminal Disclaimers 1. Terminal Disclaimers Must be Filed Before the Reference Patent Expires In Boehringer Ingelheim Int l GmbH v. Barr Laboratories, Inc., 136 Boehringer was the owner of the 812 patent-in-suit drawn to certain tetrahydrobenzthiazole compounds, including one commonly known as pramipexole. Boehringer manufactured, marketed, and sold pharmaceutical tablets containing pramipexole under the name Mirapex used for the treatment of idiopathic Parkinson s disease. The 812 patent was the third in a chain of related patents sharing a common specification. The original application, the 947 application, was filed on December 19, 1985, and contained fifteen claims. The examiner issued a restriction requirement listing ten groups of claims: I. Claims 1-8 (at least part of each), drawn to benzothiazole compounds and a pharmaceutical composition, classified in Class 548, subclasses 161, 163 and 164. II. Claims 1-5 and 8-10 (at least part of each), drawn to pyrrolidinylsubstituted benzothiazole compounds and a pharmaceutical composition, classified in Class 514, subclass 367. III. Claims 1-4 and 8 (at least part of each), drawn to piperidinyl-substituted benzothiazole compounds and a pharmaceutical composition, classified in Class 546, subclass 192. IV. Claims 1-4 and 8 (at least part of each), drawn to hexamethylimino substituted benzothiazole compounds and a pharmaceutical composition, classified in Class 540, subclass 603. V. Claims 1-4 and 8, drawn (at least part of each) [to] morpholinylsubstituted benzothiazole compounds and a pharmaceutical composition, classified in Class 544, subclass 135. VI. Claim 14, drawn to a method of preparing benzothiazole compounds using a thiourea reactant. VII. Claim 15, drawn to a method of preparing benzothiazole compounds using a disulfide reactant classified based on type of compound formed. VIII. Claims 9 and 10, drawn to a method of lowering blood pressure or heart rate classified based on type of compound used F.3d 1340 (Fed. Cir. 2010)(Opinion by Circuit Judge Linn, joined by Circuit Judge Prost, dissenting-inpart opinion by Circuit Judge Dyk)(appeal from the United States District Court for the District of Delaware in consolidated cases 05-CV-700 and 05-CV-854, Judge Joseph J. Farnan, Jr.). 59

67 IX. Claims 11 and 12, drawn to a method for treating Parkinsonism, classified based on type of compound used. X. Claim 13, drawn to a method for treating schizophrenia, classified based on type of compound used. The restriction requirement allowed the applicant to elect either (A) one of the compound groups I-V and one of the utility groups VIII-X (composition and utility to be limited to elected compound type for examination) or (B) one of the process groups VI and VII. The applicant elected to prosecute claims directed to the invention of Group II and to the invention of Group IX. The 374 patent issued from that application on March 15, While the 947 application was pending, the applicants filed a 197 application as a divisional of the 947 application. The examiner assigned to the 197 application did not require restriction. However, after a rejection, the applicants amended the 197 application such that it contained method of use claims within Groups VIII and X of the restriction requirement, as well as Group IX for compounds other than the compound of Group II elected in the parent 947 application. The panel majority concluded that the claims of the 197 and 947 applications were therefore divided along the lines drawn by the examiner in the restriction requirement. The 197 application issued as the 086 patent on June 27, 1989, and expired on June 27, While the 197 application was pending, the applicants filed a divisional the 671 application. The 671 application matured into the 812 patent-in-suit. The 671 application was originally filed with all of the claims of the original 947 application and the examiner did not require restriction. Later, however, the claims were amended to include only compound claims other than those claimed in the 374 patent, i.e., the claims encompassed Groups I, III, IV and V of the restriction requirement. The 812 patent issued on December 12, 1989 approximately six months after the issuance of the 086 patent. Boehringer applied for a patent term extension for the 812 patent stating that claims 1, 2, 3, 4, 7, 8, 9, and 10 covered Mirapex. The PTO granted the application and extended the term of the 812 patent by 1,564 days. The 812 patent s original expiration date was December 12, The consequence of the 1,564-day extension was to extend Boehringer s rights under 156 until March 25, In 2005, Mylan Pharmaceuticals, Inc. ( Mylan ) notified Boehringer that it had submitted an Abbreviated New Drug Application ( ANDA ) for generic pramipexole. Boehringer filed suit for infringement, and that suit was consolidated with an earlier action filed against Barr Laboratories, Inc. Mylan contended that the claims of the 812 patent were invalid for obviousness-type double patenting in view of the 086 patent. The district court held a bench trial in On the last day of trial, Boehringer filed a terminal disclaimer with the PTO purportedly disclaiming only the terminal part of the statutory term of the 812 patent which would extend beyond 1,564 days after the full statutory term of the 086 patent as that term is defined in 35 U.S.C. [ ] 154, so that, by virtue of this disclaimer, the [ ]812 patent will expire on October 8, That is, Boehringer sought to disclaim the approximately six months of the 812 patent s original 60

68 term that extended beyond the term of the 086 patent, and then to apply its 1,564-day extension to that shortened term. The district court held that the terminal disclaimer was not effective to overcome the charge of double-patenting because the disclaimer had been filed after the 086 patent had expired. The district court also rejected Boehringer s contention that the safe harbor of 121 prevented using the 086 patent as a reference. The district court further held that the claims of the 812 patent were obvious in light of the method of use claims in the 086 patent. Accordingly, the district court held that the claims of the 812 patent were invalid for obviousness-type double patenting in light of the 086 patent. On appeal, the Federal Circuit panel majority concluded that: (1) a terminal disclaimer must be filed before the expiration of the reference patent, and therefore Boehringer s disclaimer was ineffective to avoid obviousness-type double patenting, and (2) over a strong dissent by Circuit Judge Dyk, that the 812 patent fell within the safe harbor of 121. With respect to the terminal disclaimer, the panel majority noted that [t]he fundamental reason for the rule [of obviousness-type double patenting] is to prevent unjustified timewise extension of the right to exclude granted by a patent no matter how the extension is brought about. 137 The panel majority reasoned that [w]hen the claims of a patent are obvious in light of the claims of an earlier commonly owned patent, the patentee can have no right to exclude others from practicing the invention encompassed by the later patent after the date of the expiration of the earlier patent. But when a patentee does not terminally disclaim the later patent before the expiration of the earlier related patent, the later patent purports to remain in force even after the date on which the patentee no longer has any right to exclude others from practicing the claimed subject matter. By permitting the later patent to remain in force beyond the date of the earlier patent s expiration, the patentee wrongly purports to inform the public that it is precluded from making, using, selling, offering for sale, or importing the claimed invention during a period after the expiration of the earlier patent. 138 According to the panel majority, [b]y failing to terminally disclaim a later patent prior to the expiration of an earlier related patent, a patentee enjoys an unjustified advantage a purported time extension of the right to exclude from the date of the expiration of the earlier patent. The patentee cannot undo this unjustified timewise extension by retroactively disclaiming the term of the later patent because it has already enjoyed rights that it seeks to disclaim. Permitting such a retroactive terminal disclaimer would be inconsistent with [t]he fundamental reason for obviousness-type double patenting, namely, to prevent unjustified timewise extension of the right to exclude F.3d at 1347, quoting In re Van Ornum, 686 F.2d 937, (CCPA 1982)(emphasis by the court) F.3d at F.3d at 1348, quoting Van Ornum, 686 F.2d at (emphasis removed). 61

69 Thus, the panel majority concluded: We therefore hold that a terminal disclaimer filed after the expiration of the earlier patent over which claims have been found obvious cannot cure obviousness-type double patenting. 140 On May 7, 2010, the Federal Circuit denied petitions for panel rehearing and rehearing en banc. Circuit Judge Gajarsa dissented from denial of the petition for rehearing en banc, and Circuit Judge Dyk (who dissented-in-part in the original panel opinion) joined that dissent. Circuit Judge Gajarsa viewed the panel majority s decision as improperly expanding the statutory safe-harbor of 121 beyond its intended scope, urging that [w]hile the Supreme Court has not construed 121, the majority s expansive opinion is inconsistent with our longstanding precedent, and will work a major change in our jurisprudence. 141 Judge Gajarsa reasoned that: The purpose of 121 is to prevent the inequity that resulted from an examiner s improper restriction requirement (separating out supposedly patentably distinct inventions that were in fact the same or not patentably distinct), whereby a patentee s compliance with an examiner s incorrect restriction would result in the original application being used as a reference against the later divisional application and a rejection on double patenting grounds. * * * Thus, 121 effects a form of estoppel against the PTO, that shields the applicant from having to prove the correctness of the restriction requirement in order to preserve the validity of the second patent. * * * In our past decisions, we have limited 121 in accordance with its language and clear purpose to situations in which the patent applicant has been forced to divide his application by action of the PTO. We have interpreted the statute to include a requirement of consonance, requiring that the later application or applications follow the original examiner s restriction requirement, and we have interpreted the statute to include a requirement that the later application or application be filed as a result of the original PTO restriction. 142 According to Judge Gajarsa, the panel majority opinion committed two legal errors: First, it significantly undermines this court s consonance precedence by permitting a patentee to ignore the examiner s demarcation of independent and distinct inventions in subsequent divisional applications. Second, it engages in an impermissible and expansive reading of 121 s as a result of language. Either error in isolation would be worthy of en banc review; coupled together, the errors threaten to significantly broaden 121 s safe F.3d at F.3d at F.3d at

70 harbor provision in clear defiance of this court s strict test for application of 121. * * *. Judge Gajarsa wrote that [i]f an examiner s initial restriction requires a patentee to elect only one of the inventions to prosecute, * * * I see no logical reason why the patentee should be permitted to combine the remaining inventions into a subsequent single divisional application. 143 B. Safe Harbor The Safe Harbor of 121 Applies to divisionals of divisionals and Applies Even Though No Restriction Requirement Was Made in the Immediate Parent Application, i.e., a Restriction Requirement in a Grandparent Application is Sufficient The facts in Boehringer Ingelheim Int l GmbH v. Barr Laboratories, Inc., 144 are discussed immediately above. The second question was whether the 812 patent-in-suit was subject to the safe harbor of 121 even though no restriction requirement was made in the application maturing into the 812 patent, or in its immediately preceding parent application. As discussed above, the restriction requirement was made in the original grandparent application. Section 121 provides in relevant part: If two or more independent and distinct inventions are claimed in one application, the Director may require the application to be restricted to one of the inventions. If the other invention is made the subject of a divisional application which complies with the requirements of section 120 of this title it shall be entitled to the benefit of the filing date of the original application. A patent issuing on an application with respect to which a requirement for restriction under this section has been made, or on an application filed as a result of such a requirement, shall not be used as a reference either in the Patent and Trademark Office or in the courts against a divisional application or against the original application or any patent issued on either of them, if the divisional application is filed before the issuance of the patent on the other application * * *. (emphasis added by the court) The panel majority first reasoned that: The safe harbor of 121 is not lost if an applicant does not file separate divisional applications for every invention or when independent and distinct inventions are prosecuted together. The statute, in referring to two or more independent and distinct inventions, recognizes that the safe harbor is not limited F.3d at F.3d 1340 (Fed. Cir. 2010)(Opinion by Circuit Judge Linn, joined by Circuit Judge Prost, dissenting-inpart opinion by Circuit Judge Dyk)(appeal from the United States District Court for the District of Delaware in consolidated cases 05-CV-700 and 05-CV-854, Judge Joseph J. Farnan, Jr.). 63

71 to only one divisional application. * * * Thus, where the third sentence of 121 refers to a patent issuing on an application filed as a result of a restriction requirement, it is referring to patents issuing from any number of multiple divisional applications and precludes any one from being used as a reference against any other. 145 The district court held that the safe harbor was inapplicable because the application resulting in the 812 patent was not filed as a result of the restriction requirement in the grandparent 947 application, but because of concerns over potentially interfering matter in a patent owned by Eli Lilly. Boehringer argued that (1) the as a result of language applied to the parent 086 patent, not the 812 patent, and (2) even if the language applied, the 812 patent satisfied the same. Mylan argued that the safe harbor only applies to a divisional of a patent in which a restriction requirement was made, and does not apply to a divisional of a divisional. Thus, the two questions were: (1) whether 121 can ever apply to a divisional of a divisional of the application in which a restriction requirement was entered; and (2) whether the as a result of requirement of 121 applies to the 812 patent and is satisfied here. The panel majority answered both Yes. The panel majority reasoned that [s]ection 121 refers to restriction among two or more independent and distinct inventions and provides that a patent issuing on either the original application subject to a restriction requirement * * * or a divisional application * * * cannot be used as a reference against either the original application or a divisional application. * * * The most straightforward reading of the statutory text is that the safe harbor of 121 applies even when the PTO issues a restriction requirement that leads to more than two separate applications. 146 The panel majority further reasoned that [m]oreover, 121 refers broadly to a divisional application, and does not state that the divisional must be a direct divisional of the original application. Had Congress intended to limit the safe harbor only to a divisional of the application in which the restriction requirement was entered, it could have said a divisional application of the original application, rather than simply a divisional application. 147 The panel majority therefore rejected Mylan s argument that the safe harbor was inapplicable, and held that assuming all other requirements of 121 are met, the safeharbor provision may apply to a divisional of a divisional of the application in which a restriction requirement was entered. 148 With respect to the as a result of requirement, the district court held that requirement must be satisfied by both the 086 and 812 patents. Boehringer argued that the as a result of requirement only applied to the patent being used as a reference, i.e., the F.3d at F.3d at 1351 (emphasis omitted) F.3d at F.3d at

72 patent. The panel majority agreed with the district court that the as a result of requirement must be satisfied by both the 086 reference patent and the 812 challenged patent. According to the panel majority, the Federal Circuit has consistently held that the as a result of requirement applies to the challenged patent as well as the reference patent. However, the panel majority agreed with Boehringer that the 812 patent met the as a result of requirement. The panel majority reasoned that [t]he restriction requirement entered in the 947 application required only an election in that application of a subset of the ten identified inventions. It also had the effect of obligating Boehringer to file one or more divisional applications if it wanted patent protection for the non-elected subject matter. Boehringer did so not by filing separate divisional applications on each of the inventions grouped by the examiner in the restriction requirement, but instead, by filing two successive divisionals to different combinations of the inventions identified in the restriction requirement. In doing so, Boehringer neither violated the examiner s restriction requirement nor risked loss of the safe harbor of According to the panel majority, [s]ection 121 is not concerned with any overlap in non-elected inventions prosecuted within any particular divisional application or in how any such applications are filed. To prevent loss of the safe harbor in dividing out claims to nonelected inventions, what is required is consonance with the restriction requirement, 150 i.e., the line of demarcation drawn in the restriction requirement must be maintained. That, the panel majority held, does not mean, as Mylan argued, that an applicant must follow the original election procedure and not submit overlapping claims. According to the panel majority, [a]n overlap of claims to independent and distinct inventions within a given divisional application is neither contrary to the restriction requirement nor relevant to the requirements of the third sentence of 121. Rather, what consonance requires is that the claims prosecuted in two or more applications having common lineage in a divisional chain honor, as between applications, the lines of demarcation drawn by the examiner to what he or she considered independent and distinct inventions in the restriction requirement. 151 In short, according to the panel majority, [t]he divisions need not be limited to a single one of the examiner s demarcated inventions to preserve the right to rely on the safe harbor of The panel majority concluded that none of the inventions claimed in the 374 original patent, the 086 divisional and the 812 divisional crossed the original lines of demarcation of the restriction requirement. Accordingly, the requirement for consonance was met, and the 812 patent was entitled to the benefit of the safe harbor. Circuit Judge Dyk issued a lengthy dissent. Judge Dyk agreed with the panel majority that 121 was not limited to the first filed divisional application, and extended to later filed F.3d at F.3d at F.3d at F.3d at

73 divisional applications provided those later applications were filed as a result of the restriction requirement and were consonant with that restriction requirement. However, Judge Dyk contended that the panel majority had misconstrued both the as a result of and consonance requirements. According to Judge Dyk, the 197 application was not consonant with the original restriction requirement because the applicants presented claims within Groups VIII, IX and X. The 671 application, according to Judge Dyk, was not consonant with the restriction requirement because that application presented claims within Groups I, III, IV and V. Judge Dyk contended that [h]ere it is clear that the patent examiner s line of demarcation between independent and distinct inventions was not preserved, as is required by our case law, because both the parent and the child applications combined distinct inventions. 153 Judge Dyk also reasoned that the application maturing into the 812 patent was not filed as a result of the restriction requirement because the examiner in the immediate parent application had not required restriction. Judge Dyk viewed the filling of separate applications as thus being voluntary. 2. The Safe Harbor of 121 is Limited to Divisional Applications Denomiated as Such And Does Not Extend to Continuations The Federal Circuit in Amgen, Inc. v. F. Hoffman-La Roche Ltd., 154 extended the holding in Pfizer, Inc. v. Teva Pharmaceuticals USA, Inc., 155 that the safe harbor of 121 does not extend to continuations-in-part, to continuation applications as well, even though an application styled as a continuation actually meets the definition of a divisional application. Section 121 provides: If two or more independent and distinct inventions are claimed in one application, the Director may require the application to be restricted to one of the inventions. If the other invention is made the subject of a divisional application which complies with the requirements of section 120 of this title it shall be entitled to the benefit of the filing date of the original application. A patent issuing on an application with respect to which a requirement for restriction under this section has been made, or on an application filed as a result of such a requirement, shall not be used as a reference either in the Patent and Trademark Office or in the courts against a divisional application or against the original application or any patent issued on either of them, if F.3d at F.3d 1340 (Fed. Cir. 2009)(Opinion by Circuit Judge Schall, joined by Circuit Judges Mayer and Clevenger)(appeals from the United States District Court for the District of Massachusetts in case no. 05-CV , Judge William G. Young) F.3d 1353 (Fed. Cir. 2008). 66

74 the divisional application is filed before the issuance of the patent on the other application. If a divisional application is directed solely to subject matter described and claimed in the original application as filed, the Director may dispense with signing and execution by the inventor. The validity of a patent shall not be questioned for failure of the Director to require the application to be restricted to one invention. (emphasis by the court) Amgen s five patents-in-suit were drawn to the production of erythropoietin (EPO) using recombinant deoxyribonucleic acid (DNA) technology. All five patents shared a common specification and descended from now-expired U.S. Patent No. 4,703,008 (the 008 patent). 156 During prosecution the application maturing into the 008 patent originally contained claims drawn to, inter alia, DNA sequences, host cells, processes of producing polypeptides, polypeptides, and pharmaceutical compositions. The PTO entered a six-way restriction requirement: I. Claims 1 13, 16, 39 41, 47 54, and 59, drawn to polypeptide, classified in Class 260, subclass 112. II. Claims 14, 15, 17 36, 58, and 61 72, drawn to DNA, classified in Class 536, subclass 27. III. Claims 37 38, drawn to plasmid, classified in Class 435, subclass 317. IV. Claims 42 46, drawn to cells, classified in Class 435, subclass 240. V. Claims 55 57, drawn to pharmaceutical composition, classified in Class 435, subclass 177. VI. Claim 60, drawn to assay, classified in Class 435, subclass 6. Amgen elected to prosecute the Group II claims which were drawn to DNA and host cells. Ultimately, the 008 patent entitled DNA Sequences Encoding Erythropoietin issued claiming DNA sequences encoding EPO and host cells transformed or transfected with those DNA sequences. The opinion is not completely accurate in describing the lineage of the patents-insuit, presumably to simplify the description. According to the opinion, after the restriction requirement, Amgen filed two continuation applications the 178 and 179 applications. Also, according to the opinion, after a series of intervening applications, the 933 patent-insuit issued from the 178 application, and the 422, 349, 868 and 698 patents-in-suit issued from the 179 application. All claimed priority to the application issuing as the ultimate parent 008 patent. The district court held that the restriction requirement insulated the patents-in-suit from an assertion of double patenting, and granted Amgen JMOL on the assertion of obviousness-type double patenting. The Federal Circuit reversed. 156 Actually, the 008 patent itself descended from three earlier abandoned applications. The opinion, however, treats the 008 patent as the ultimate parent. 67

75 In Pfizer, the Federal Circuit had addressed whether a patent that issued from a continuation-in-part application as opposed to a divisional application could fall within the safe harbor of 121. The Federal Circuit concluded that it could not based on (1) the language of the statute (which referred only to divisional application[s], (2) the legislative history which also referred to divisional application[s]. The Federal Circuit commented that [w]e are persuaded by the reasoning in Pfizer that the 121 safe harbor provision does not protect continuation applications or patents descending from only continuation applications. 157 The court again relied on the language of the 121 safe harbor provision referring only to divisional application[s], and noted that a continuation application, like a continuation-in-part application, is not a divisional application. 158 The court further noted that [w]e recognize that, unlike a continuation-inpart application, a continuation application can satisfy the definition of a divisional application in MPEP That is because a continuation-in-part application adds subject matter not disclosed in the earlier application, * * * whereas continuation and divisional applications are limited to subject matter disclosed in the earlier application, * * *. This distinction, however, does not justify departing from a strict application of the plain language of 121, which affords its benefits to divisional application[s]. 159 Amgen argued that the 178 and 179 continuation applications could have been filed as divisional applications and should be treated substantively as divisional applications regardless of the label. The Federal Circuit declined to do so. The Federal Circuit held that [b]ecause the 178 and 179 applications were filed as continuation applications instead of divisional applications, we hold that the 933, 422, and 349 patents do not receive the protections afforded by 121 s safe harbor. As a result, we vacate the grant of summary judgment and of JMOL of no obviousness-type double patenting of the 933, 422, and 349 patents and remand to the district court the question of whether the asserted claims of those patents are invalid for obviousness-type double patenting over the claims of the 008, 868, and 698 patents F.3d at F.3d at F.3d at F.3d at

76 III. LEGAL ETHICS AND INEQUITABLE CONDUCT A. Materiality 1. Arguments Made to the EPO That Arguably Contradict Arguments Made to the USPTO Are Material On April 26, 2010, the Federal Circuit granted a petition for rehearing en banc in Therasense, Inc. v. Becton, Dickinson & Co., 161 and vacated the panel s opinion. The Federal Circuit requested additional briefing on six questions: 1. Should the materiality-intent-balancing framework for inequitable conduct be modified or replaced? 2. If so, how? In particular, should the standard be tied directly to fraud or unclean hands? See Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806 (1945); Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238 (1944), overruled on other grounds by Standard Oil Co. v. United States, 429 U.S. 17 (1976); Keystone Driller Co. v. Gen. Excavator Co., 290 U.S. 240 (1933). If so, what is the appropriate standard for fraud or unclean hands? 3. What is the proper standard for materiality? What role should the United States Patent and Trademark Office s rules play in defining materiality? Should a finding of materiality require that but for the alleged misconduct, one or more claims would not have issued? 4. Under what circumstances is it proper to infer intent from materiality? See Kingsdown Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d 867 (Fed. Cir. 1988) (en banc). 5. Should the balancing inquiry (balancing materiality and intent) be abandoned? 6. Whether the standards for materiality and intent in other federal agency contexts or at common law shed light on the appropriate standards to be applied in the patent context. Those questions substantially expanded on the issues addressed by the panel. The panel in Therasense primarily addressed the question how one of ordinary skill in the art would interpret the disclosure of a prior art patent for purposes of determining whether the asserted claims of one of the patents-in-suit were invalid. The Federal Circuit panel majority relied heavily on the claims of the prior art patent in determining the scope of F.3d 1289 (Fed. Cir. 2010)(Opinion by Circuit Judge Dyk, joined by Circuit Judge Friedman, concurring-in-part, dissenting-in-part opinion by Circuit Judge Linn)(appeals from the United States District Court for the Northern District of California in consolidated case nos. 04-CV-2123, 04-CV-3327, 04-CV-3732, and 05-CV-3117, Judge William H. Alsup). 69

77 disclosure, which drew sharp criticism from Circuit Judge Linn in the concurring-in-part portion of his concurring-in-part, dissenting-in-part opinion. The same issue, i.e., how one of ordinary skill in the art would interpret the disclosure of the prior art patent, also arose in the context of inequitable conduct. The panel majority concluded that statements made to the EPO concerning that prior art patent were inconsistent with statements made to the USPTO regarding the same patent. The panel majority held that the statements made to the EPO were material, and that failure to disclose the same constituted inequitable conduct. Circuit Judge Linn filed a lengthy dissent urging that the panel majority s conclusion was contrary to Scanner Technologies Corp. v. ICOS Vision Systems Corp., 162 i.e., [w]henever evidence proffered to show either materiality or intent is susceptible of multiple reasonable inferences, a district court clearly errs in overlooking one inference in favor of another equally reasonable inference. Becton, Dickinson & Co. (BD) originally filed a declaratory judgment action seeking a judgment that it was not infringing two patents (the 164 and 745 patents) now owned by Abbott Diabetes Care, Inc. (successor to Therasense, Inc.). 163 Abbott subsequently sued Bayer Healthcare LLC for infringement of two patents (the 551 and 745 patents), and countersued BD for infringement of all three patents. Abbott also sued Nova Biomedical Corp., BD s supplier, for infringement of all three patents. The cases were consolidated. The district court held on summary judgment that the BD/Nova products did not infringe any claims of the 164 or 745 patents, and that certain claims of the 745 patent were invalid as anticipated by prior art. In a bench trial, the district court held that certain claims of the 551 patent were invalid due to obviousness, and that the 551 patent was unenforceable because of inequitable conduct. On appeal, the Federal Circuit panel majority affirmed. The patents-in-suit were drawn to disposable blood glucose test strips that were used in conjunction with glucose meters to measure the level of glucose in a blood sample. Glucose in blood introduced to a test strip reacted with an enzyme on the strip, and transferred electrons to the enzyme. A mediator incorporated on the strip transferred electrons from the enzyme to the active electrode of electrochemical biosensors. The electrons then flowed from the strip into a glucose meter which calculated glucose concentration. Common test strips measured glucose levels in samples of whole blood. However, the electrochemical sensors were also capable of measuring glucose levels in other sample types as well, e.g., blood plasma, fluid between skin cells and organs ( interstitial fluid ), and buffer solutions. Those sensors were also capable of measuring samples in vivo using live blood. Some sensors in the prior art used membranes to control the flow of glucose to the electrode. Other prior art sensors used membranes to prevent fouling, i.e., red blood cells sticking to the active electrode which resulted in inaccurate measurements. Also, prior art F.3d 1365 (Fed. Cir. 2008). 163 Throughout the opinion, the Federal Circuit used Abbott to refer both to the current Abbott entities and to their predecessors as well. That practice will be continued here. 70

78 sensors injected into the human body for in vivo measurements used membranes as a safety measure to prevent dissolving and fouling. The claims of the 551 patent thus were drawn to a test strip with an electrochemical sensor for testing whole blood without any membrane over the electrode. The question vis-à-vis obviousness was whether a prior art 382 patent disclosed a glucose sensor without a membrane for use with whole blood. The district court held that the prior art 382 patent disclosed that a membrane was preferred, but optional, in all cases other than live blood. The Federal Circuit agreed. The prior art 382 patent had been filed by one of Abbott s predecessors, and the first two named inventors were also the first two named inventors on the 551 patent-in-suit. In determining what the prior art 382 patent disclosed, the panel majority began by commenting that [t]he claims of a prior art patent are part of its disclosure, citing In re Brenno, 164 Circuit Judge Linn pointed out in the concurring-in-part portion of his opinion that Brenno did not actually support that proposition. In any event, the panel majority reasoned that [t]he claims of the 382 patent are plainly directed in part to sensors without a membrane, as is made clear by the dependent claims that specifically include a membrane as an additional feature of the device. 165 The panel majority also noted that one disclosed embodiment involved a membraneless sensor for testing interstitial fluid, and Example 8 described tests on strips using a buffer solution both with and without membranes. Abbott did not dispute that the prior art 382 patent broadly claimed membraneless strips, and that the specification disclosed membraneless strips. Abbott, however, argued that in the case of blood, a membrane was required. In rejecting that argument, the panel majority again turned to the claims of the prior art 382 patent and commented that it is significant that none of the claims in the 382 patent explicitly distinguishes between blood and other fluids. Also pertinent is the difference between in vivo sensors and in vitro sensors. In vivo sensors test live blood or other fluids inside the body, while in vitro sensors test fluids such as blood after they have been extracted from the body. Claims 1 17 of the 382 patent cover both in vivo and in vitro sensors; additional claims are limited to in vivo sensors, though again those claims do not distinguish between sensors for blood and other fluids. 166 The specification of the 382 patent also stated: Optionally, but preferably when being used on live blood, a protective membrane surrounds both the enzyme and the mediator layers, permeable to water and glucose molecules. The panel majority concluded that contradicted Abbott s argument. Nevertheless, Abbott argued that one of ordinary skill in the art would not have read the prior art 382 patent literally to mean that a membrane was not necessary with blood F.2d 1340, 1346 (Fed. Cir. 1985) F.3d at F.3d at

79 Abbott s expert testified that one of ordinary skill in the art in time frame of the 382 patent (1983) would have thought that a membrane was necessary when testing whole blood because of the risk of fouling. Bayer s expert witness, on the other hand, distinguished in vivo from in vitro testing, and testified that a membrane would not have been considered necessary for in vitro testing. The district court credited Bayer s witness. The panel majority concluded that did not constitute clear error. With respect to the charge of inequitable conduct, the original application that matured into the 551 patent was filed in Over the following thirteen years, Abbott filed several continuation applications in response to rejections for anticipation and obviousness based, inter alia, on the 382 prior art patent. In 1997, according to the panel majority, Abbott s patent attorney, Pope, and Abbott s Director of Research and Development, Dr. Sanghera, held a brainstorming session and developed a new argument. New membraneless claims were drafted and during an interview with the examiner, the argument was made that the claims were neither anticipated nor obvious because the claims were drawn to a new glucose sensor that did not require membranes when testing whole blood. Pope and the examiner discussed the [o]ptionally, but preferably language in the 382 patent, and in Pope s summary of the interview, he stated that he pointed out [to the examiner] that [the 382 patent] teaches that active electrodes designed for use with whole blood require a protective membrane. The examiner agreed that if Abbott produced an affidavit or other evidentiary showing that at the time of the invention such a membrane was considered essential [for whole blood, it] would overcome [the 382 patent s] teaching. Dr. Sanghera then submitted a declaration to the PTO urging that the language of the 382 patent should not be taken literally: [B]ased on his historical knowledge he is confiednt [sic] that on the filing date of the earlist [sic] application leading to the present application on June 6, 1983 and for a considerable time thereafter one skilled in the art would have felt that an active electrode comprising an enzyme and a mediator would require a protective membrane if it were to be used with a whole blood sample. Therefore, he is sure that one skilled in the art would not read lines 63 to 65 of column 4 of U.S. Patent No. 4,545,382 to teach that the use of a protective membrane with a whole blood sample is optionally or merely preferred. (emphasis by the court) Pope further argued that [t]he art continued to believe [following the 382 patent] that a barrier layer for whole blood sample was necessary for a considerable period, and [o]ne skilled in the art would not have read the disclosure of the Higgins patent (U.S. 4,545,382) as teaching that the use of a protective membrane with whole blood samples was optional. He would not, especially in view of the working examples, have read the optionally, but preferably language * * * as a technical teaching but rather mere patent phraseology. This is supported by the Declaration under 37 C.F.R of Gordon Sanghera which accompanies the present amendment. The PTO subsequently allowed the application to issue as the 551 patent. In the EPO, European Patent EP ( the 636 patent ) was a counterpart to the 382 patent with a virtually identical specification. In 1993, the 636 patent was revoked 72

80 as having been obvious. One of the references the EPO relied on was a German reference D1. In 1994, Abbott submitted a brief to the EPO seeking to distinguish the 636 patent from the D1 reference. In that brief, Abbott argued, inter alia, that [c]ontrary to the semipermeable membrane of D1, the protective membrane optionally utilized with the glucose sensor of the patent is [sic] suit is not controlling the permeability of the substrate * * *, but rather (quoting from the specification) [o]ptionally, but preferably when being used on live blood, a protective membrane surrounds both the enzyme and the mediator layers, permeable to water and glucose molecules. In 1995, Abbott s patent counsel filed another brief with the EPO that again discussed the [o]ptionally, but preferably language, this time urging that [i]t is submitted that this disclosure is unequivocally clear. The protective membrane is optional, however, it is preferred when used on live blood * * *. The district court found that the statements to the EPO contradicted Abbott s representations to the USPTO. Abbott argued that the statements were not inconsistent because the focus in the EPO was on distinguishing the semipermeable membrane of the D1 reference from the protective, permeable membrane of the 636 patent. The panel majority found that was correct, but that Abbott had also argued to the EPO that the protective membrane of the 636 patent was optional. The panel majority was particularly persuaded by Abbott s argument in 1995 that the [o]ptionally, but preferably language was unequivocally clear. The panel majority concluded: Abbott told the EPO was contrary to what Abbott told the PTO. To deprive an examiner of the EPO statements statements directly contrary to Abbott s representations to the PTO on the grounds that they were not material would be to eviscerate the duty of disclosure. Moreover, if this could be regarded as a close case, which it is not, we have repeatedly emphasized that the duty of disclosure requires that the material in question be submitted to the examiner rather than withheld by the applicant. 167 Abbott further argued that this was simply lawyer argument about prior art, and thus was not material. The panel majority, in rejecting that argument, distinguished lawyer argument concerning prior art from contradictory statements made to another patent office: This court has held that representations made to the PTO concerning the content of prior art amount[] to mere attorney argument and our precedent has made clear that an applicant is free to advocate its interpretation of its claims and the teachings of the prior art. * * * However, all of the cases Abbott cites involve patentees who simply made representations to the PTO about prior art in order to secure the allowance of their patents. * * * None of these cases involved a situation in which contradictory arguments made in another forum were withheld from the PTO. They do not speak to the applicant s obligation to advise the PTO of contrary representations made in another forum. Before the EPO, Abbott made statements that contradicted the representations Abbott made to the PTO regarding the 382 patent. An applicant s earlier statements about prior art, especially one s own prior art, are material to the PTO when those statements directly contradict the applicant s position regarding that prior art in the PTO. * * * In any event, the representations to the PTO were F.3d at

81 not merely lawyer argument; they were factual assertions as to the views of those skilled in the art, provided in affidavit form. 168 With respect to intent, the district court had made five findings: (1) that the statements made to the PTO concerning the prior art 382 patent were absolutely critical in overcoming the examiner s earlier rejections of the claims of the 551 patent; (2) that the EPO statements would have been very important to an examiner because they contradicted the representations made to the PTO; (3) that Pope and Dr. Sanghera both knew of the EPO statements and consciously withheld them from the PTO; (4) that neither Pope nor Dr. Sanghera provided a credible explanation for failing to submit the EPO documents to the PTO; and (5) that Pope s and Dr. Sanghera s explanations for withholding the EPO documents were so incredible that they suggested intent to deceive. The panel majority found that the first was undisputed, the second was not clearly erroneous, the third was undisputed, and the fourth and fifth were based on the district court s assessment of witness credibility. The panel majority concluded that there was ample support in the record for the district court s conclusions. The panel majority also noted that Pope had relied on Dr. Sanghera to provide a declaration to the USPTO, even though at the time he was not a person having ordinary skill in the art, rather than the inventor Dr. Higgins, who testified that the phrase preferably when being used on live blood meant that you would probably need a membrane, but not definitely. Higgins apparently testified that Dr. Sanghera s declaration statements concerning whole blood were simply wrong. Accordingly, the panel majority affirmed the district court s conclusion that the 551 patent was unenforceable because of inequitable conduct. Circuit Judge Linn dissented urging I believe that the rule of Scanner Technologies has been breached in this case. The submissions made by Abbott to the EPO are susceptible of multiple reasonable inferences and, depending on the inference drawn, may or may not be material. In each instance, the district court inferred one meaning from the EPO submissions, rendering them material, when an equally reasonable (if not more reasonable) inference renders them immaterial. 169 Judge Linn then extensively discussed the arguments made to the EPO and the USPTO, and concluded that those arguments were not necessarily inconsistent. Circuit Judge Linn also commented on the panel majority s reference to close cases : The majority invokes the familiar adage that [c]lose cases should be resolved by disclosure. * * * It is sage advice, and practitioners should take it to heart, so that they may avoid even being accused of inequitable conduct, much less being found to have committed it. But this adage is not a legal rule. We have never recognized a close case standard for materiality. * * * Our circuit already entertains five different standards for materiality. * * * I do not think that we need a sixth F.3d at F.3d at F.3d at

82 With respect to intent, Judge Linn urged that the question for purposes of specific intent is, Is it plausible that the applicant subjectively believed that the reference was immaterial? This inquiry properly focuses on what the applicant knew or believed to be true about the reference at the time that he or she decided to withhold it. 171 Judge Linn urged that it was plausible that Pope and Dr. Sanghera subjectively believed that the EPO discussion of the 382/ 636 patent did not contradict the use of membranes for testing on whole blood. Judge Linn also noted that neither Pope nor Dr. Sanghera were aware of Dr. Higgins views, and that Dr. Sanghera had the necessary qualifications to provide the declaration. With respect to judging credibility, Judge Linn wrote that [w]hile considerable deference is owed to a trial court s credibility determinations, this does not mean that a trial court can cloak the application of an erroneous legal standard in the guise of a credibility determination, and thereby shield it from appellate review. 172 Judge Linn contended that the district court simply disagreed with Pope s and Dr. Sanghera s interpretation of the EPO submissions. 2. Federal Circuit Evidences Deep Divide Among Judges on Inequitable Conduct In Taltech Ltd. v. Esquel Enterprises Ltd., 173 the only teaching evident from the case was the deep divide between the panel majority and the dissent. The panel majority and dissent disagreed not only on the applicable law of inequitable conduct, but on the facts of the case as well. Indeed, most of the panel majority opinion is devoted to responding to the dissent. The panel majority affirmed the district court s award of attorneys fees under 285 largely (but not entirely) based on perceived inequitable conduct. Taltech was the owner of the patent-in-suit drawn to seams that included a thermal adhesive to reduce pucker. The following explanation of the patent-in-suit does not appear in the Federal Circuit s opinion, but is helpful in understanding the charge of inequitable conduct. The abstract of the patent-in-suit explained: A pucker free garment seam providing a garment with a tailored and wrinkle free appearance. The pucker free seam and method of manufacture utilizes a bonding element which contains at least a thermal adhesive component which is inserted between first and second garment components along the seam. A sufficient amount of heat and pressure is applied to the seam which causes the adhesive of the bonding element to flow onto the surfaces of the garment components thereby creating a compressed seam and permanently F.3d at F.3d at 1322, quoting Andreu v. Sec y of Dep t of Health & Human Servs., 569 F.3d 1367, 1379 (Fed. Cir. 2009) F.3d 1324 (Fed. Cir. 2010)(Opinion by Circuit Judge Mayer, joined by Circuit Judge Friedman, dissenting opinion by Circuit Judge Gajarsa)(appeal from the United States Court for the Western District of Washington in case no. 04-CV-974, Senior Judge Thomas S. Zilly). 75

83 bonding the first and second garment components together along the seam to eliminate puckering associated with shrinkage of the sewing thread. U.S. Patent No. 5,568,779 (abstract). Fig. 2 illustrated an armhole seam of a dress shirt made in accordance with the invention (although the claims were not limited to armhole seams): Figs. 3a-3c illustrated the progressive manufacturing steps of an armhole seam using a single needle set sleeve: As illustrated, a bonding element 32, a first garment component 20, and a second garment component were positioned as shown in Fig. 3a. A first stitch 38 was sewn along the seam line of the garment components. As shown in Fig. 3b, first garment component was then folded over bonding element 34. Also, the second garment component 22 was folded to abut the bonding element. Head and pressure was then applied to the seam through, for example, ironing causing adhesive from the bonding element to flow onto the surfaces of the first and second garment components. That bond prevented pucker. Figs. 4a-4c illustrated the progressive manufacturing steps of an armhole seam using a double needle set sleeve: The steps were substantially the same as for the single needle set sleeve. Esquel filed a declaratory judgment action asserting non-infringement, and TAL counterclaimed asserting infringement. After a bench trial, the district court concluded that John Wong, the inventor, had engaged in inequitable conduct by failing to disclose a raincoat 76

84 seam that included a fusible adhesive tape (referred to as URS for Undisclosed Raincoat Seam ) and by allegedly misrepresenting a prior raincoat seam (known as the double topstitch seam ). The district court concluded that the case was exceptional, and awarded Esquel its attorneys fees and costs under 285. On appeal, the Federal Circuit vacated and remanded for a determination whether the URS was cumulative to a German patent Robers. After remand, the district court again the found the case to be the exception based on the same two instances of alleged inequitable conduct, plus alleged abusive litigation tactics. The district court again awarded Esquel its attorneys fees and costs, and assessed post-judgment at a rate from the date of the earlier judgment. On appeal, the Federal Circuit panel majority affirmed the award of attorneys fees and costs, but reversed the district court s choice of interest rate. Judge Gajarsa describes the URS in his dissent. Apparently this was a handmade drawing that the inventor, Wong, sketched during his deposition. Defendants counsel had requested Wong to draw what prior art had inspired him to experiment in making puckerfree seams. Wong drew a seam TAL used for waterproof raincoats. During litigation, that sketch was labeled the URS. According to Judge Gajarsa, the district court prior to the first appeal found that Wong committed fraud on the [PTO] because he failed to disclose the URS as the inspiration for his invention. Also according to Judge Gajarsa, the Federal Circuit vacated the inequitable conduct finding on the first appeal because there is no legal requirement that an inventor disclose the inspiration for his invention to the PTO. 174 Comment: Many of the following facts of the case are taken from Judge Gajarsa s dissent. The reason is that the panel majority opinion seems to assume the reader s knowledge of such facts. As noted above, the panel majority opinion, in large part, is devoted to responding to the dissent suggesting that perhaps Judge Gajarsa s dissent began life as a panel opinion. With respect to whether the URS was cumulative to Robers, Judge Gajarsa notes that the district court, as part of cumulativeness analysis, considered a portion of the English translation of Robers that TAL submitted to the PTO: a process for the production of a pucker free closure seam, in particular for popeline and gabardine materials, wherein a seam of or containing a thermoplastic is sewn into the seam by a method already known, and the part of the material adjoining the seam is then ironed while under slight tension. During litigation, Esquel submitted a different translation. The district court, after comparing the two translations, found that TAL s translation was inadequate and had limited Robers disclosure. TAL s translation used closure and seam, respectively, and Esquel s translation used assembly and ribbon, respectively. According to the panel majority opinion, the district court concluded that TAL s submission was so inadequate that the F.3d at

85 patent examiner would not have understood the Robers Patent to teach anything material to patentability of the smooth seam method and product claims at issue. 175 According to the panel majority opinion, [t]he district court found the URS not cumulative to Robers because: (1) TAL s translation was inadequate to inform a patent examiner that Robers was material to patentability; (2) the URS had an armhole seam relevant to dependent claims 6, 7, 24, and 25 of TAL s application, while Robers only described a closure seam; and (3) the URS incorporated Vilene SL33, the adjudicated withheld best mode for the [patent-in-suit], while Robers only disclosed a generic thermoplastic component. 176 Judge Gajarsa in dissent noted that [f]irst, the issue on remand was whether the URS was cumulative of Robers, not vice versa. Thus, it is not apparent what the district court meant when it stated that the Court would not view the Robers Patent as cumulative. 177 Second, according to Judge Gajarsa, while the district court quibbled over the proper translation of several words from German to English, it also noted that the translators chose different English words having, for the most part, equivalent meanings. * * * The art of translation is not precise, and, absent any evidence of intent to deceive, minor variations in submitted translations do not constitute inequitable conduct. 178 The panel majority, on the other hand, noted that the district court had characterized those translation differences as crucial exceptions F.3d at F.3d at F.3d at F.3d at

86 Judge Gajarsa further urged that [h]ad the district court properly considered the teachings of Robers, it would have concluded that the URS is merely cumulative of Robers. To determine whether a reference is cumulative of the prior art disclosed to the PTO, this court uses an element-by-element approach to compare the disclosed prior art reference and the undisclosed prior art reference with the claimed invention. * * * In this case, the undisclosed prior art reference, the URS, has the following elements: (a) a top fabric layer, (b) a bottom fabric layer, (c) a folded strip of adhesive, (d) a set stitch, and (e) a top stitch. Likewise, the disclosed reference, the Robers patent, has the very same elements: (a) a top fabric layer ( 2 ), (b) a bottom fabric layer ( 3 ), (c) a folded strip of adhesive ( 1 ), (d) a set stitch ( 4 ), and (e) a top stitch ( 5 ) : 179 According to Judge Gajarsa, Robers, however, also discloses an important element that is not present in the URS. Robers top stitch passes through the first fabric layer, the strip of adhesive, and the second fabric layer. Wong testified that this type of top stitch was discovered to be vital in preventing seam puckering in dress shirts. The claimed invention uses a top stitch that passes through both layers of fabric and the strip of adhesive. This element was critical to the success of the claimed invention, yet it is entirely absent from the URS because the URS s top stitch passes through layers of fabric only. Thus, Robers discloses every element that the URS discloses and also discloses the critical top stitch not disclosed in the URS. Accordingly, the URS is merely cumulative and does not support a finding of inequitable conduct F.3d at F.3d at

87 Judge Gajarsa further noted that Robers was more relevant than the URS because Robers was drawn to achieving pucker-free seams in dress shirts the same as the goal of the patent-in-suit. The URS, on the other hand, was used only in rain coats. The panel majority, on the other hand, wrote that the dissent emphasizes an element-by-element comparison of Robers and the URS, which it says results in Robers being more relevant, thereby making the URS cumulative. But the dissent s underlying premise is flawed. The trial court s failure to conduct a URS-Robers comparison was based on thoroughly analyzing the differences between the Robers translations. From this the court deemed Robers to not have been before the examiner for all intents and purposes, which obviated the need for a comparison. 181 The second reason the district court relied on in finding that the URS was not cumulative was that the URS had an armhole seam relevant to certain dependent claims, while Robers described only a closure seam. Judge Gajarsa, though, notes in his dissent that there was no evidence whatsoever that the URS was an armhole seam. Judge Gajarsa notes that Wong did not so testify, and was never asked whether the drawing was of an armhole seam. The panel majority, on the other hand, wrote that [t]he finding that the URS is an armhole seam is supported by the evidence. * * * Even if it were a different type of seam, as the dissent seems to think, it remains non-cumulative because Robers is limited to closure seams. 182 The third reason the district court relied on in finding that the URS was not cumulative, was that the URS incorporated Vilene SL33, while Robers only disclosed a generic thermoplastic component. Judge Gajarsa noted, however, that none of the claims required Vilene SL33, and the examiner had considered a number of examples of polyamide adhesives for garment seams. According to Judge Gajarsa, no reasonable examiner would have found the URS s disclosure of Vilene SL33 material because the specific type of polyamide adhesive was not relevant to the examination of the pending claims. 183 The panel majority, in response, wrote: Here, however, claims 3 and 22 include polyamide, and Vilene SL33 is a specific example of a polyamide. This information is material because a reasonable examiner would consider it important in deciding whether to allow the application to issue as a patent. The panel majority did not explain why an examiner would have considered it important. With respect to intent to deceive, the panel majority wrote: TAL chose to disclose the double top-stitch seam, presented as wholly inadequate for dress shirts in a 1996 amendment, instead of the URS that more closely approximated a high-priced dress shirt seam; and its failure to disclose the URS, which included Vilene SL33, is consistent with its non-disclosure of the Vilene SL33 best mode. * * * On these bases, the district court could F.3d at F.3d at F.3d at

88 properly infer that TAL acted with deceptive intent. The dissent insists that Robers was before the examiner and the URS was therefore cumulative, but, again, the district court deemed to the contrary because of the faulty translation. 184 Judge Gajarsa, on the other hand, noted that it is undisputed that Robers disclosed a single top stitch. * * * Even if the majority and district court believe that the Robers translation was inadequate, such inadequacy could not have prevented the examiner from understanding Robers Figure 3 which, whether read in German or English, indisputably contains a single top stitch. Accordingly, the district court inferred intent from the failure to disclose a prior element that was in fact already before the examiner. This establishes not only that the URS was cumulative of Robers, but also that the district court s inference of deceptive intent is unwarranted. 185 The district court also inferred intent to deceive from what the district court deemed to be a misleading statement that he had only recently become aware of a disclosed double top-stitch seam. Judge Gajarsa notes that [t]he statement that the district court labeled misleading occurred in the 1996 amendment that presented the drawing of the Disclosed Raincoat Seam in these words: In addition to the current prior art of record, applicant s representative has recently become aware that applicant has made prior sales in the United States of raincoats that incorporate an adhesive structure along a raincoat seam. (emphasis by Judge Gajarsa) According to the district court, Wong represented to the PTO that he had recently become aware of the Double Top-Stitch Seam (i.e., the Disclosed Raincoat Seam ), * * * The district court concluded it was misleading for Wong to represent that he was only recently aware of that raincoat seam because Wong admitted that he learned of the Disclosed Raincoat Seam before filing his patent application and it was the very source of his idea to use thermal adhesives in dress shirts. 186 Judge Gajarsa notes that the applicant s representative was a reference to the prosecuting attorney not the inventor Wong. According to Judge Gajarsa, Wong told the prosecuting attorney about the Disclosed Raincoat Seam shortly before the amendment. Judge Gajarsa suggested that the district court had misunderstood the scenario: The statement it criticized as misleading was not misleading at all; it was entirely accurate. The statement did not represent that Wong himself had recently become aware of the Disclosed Raincoat Seam, and the examiner was not misled. 187 The panel majority wrote that [t]he district court, however, fully grasped the attorney s decision to be intentionally ambiguous about when Wong was aware of the prior F.3d at F.3d at F.3d at F.3d at

89 sales, and this misdirection is imputable to Wong, * * *. 188 However, Judge Gajarsa viewed the district court s opinion as indicating that the district court had misread the 1996 amendment. Judge Gajarsa also accused the panel majority of conflating materiality and intent, while the panel majority denied that it was doing so. The panel majority wrote that TAL s assertion of unequivocal untruths about a reference, simultaneous with presentation of the reference, in order to minimize the reference s impact on the examiner shows TAL s intent to deceive. 189 Judge Gajarsa responded: An inference of deceptive intent may be drawn from an applicant s gross mischaracterization or unreasonable interpretation of the prior art. * * * However, attorneys are entitled to make reasonable arguments regarding the prior art. 190 Judge Gajarsa noted that [t]he district court and majority characterize TAL s statements that certain prior art stitches are wholly inadequate or unacceptable for dress shirts, despite evidence of their inclusion in five percent of TAL s dress shirts, as unequivocal untruths. * * * However, there is an equally reasonable inference that TAL believed that the prior art stitches are wholly inadequate or unacceptable and, therefore, incorporated these stitches into only five percent of their shirts on the market. Because TAL s statements support two equally plausible inferences and can be viewed as reasonable attorney argument, the district court and the majority commit legal error by inferring deceptive intent in this situation. (emphasis by Judge Gajarsa) 191 In the end, the case simply represents the deep divide shaping the debate on inequitable conduct. The panel majority had no trouble in concluding that Wong had committed inequitable conduct, while Judge Gajarsa wrote that [t]his case exemplifies the ongoing pandemic of baseless inequitable conduct charges that pervade our patent system F.3d at F.3d at F.3d at F.3d at F.3d at

90 B. Intent 1. Inferred a) Fabricating Evidence May Furnish Grounds for Finding an Intent to Deceive In Advanced Magnetic Closures, Inc. v. Rome Fastener Corp., 193 the Federal Circuit affirmed the district court s conclusion that AMC s patent-in-suit, drawn to magnetic snap fasteners commonly used in women s handbags, was unenforceable because of inequitable conduct, and considered an award of attorney s fees and costs under 285 against AMC, and its attorneys, the law firm of Abelman, Frayne & Schwab ( Abelman ) and David Jaroslawicz -- the sole member of Jaroslawicz & Jaros, LLC., requiring AMC, Abelman, and Mr. Jaroslawicz to pay the defendants (referred to collectively as Romag in the opinion) attorney s fees plus interest in the amounts of $1,509,976.16; $1,000,160.74; and $454,197.36, respectively, based on the inequitable conduct, as well as litigation misconduct under 28 U.S.C Abelman settled with Romag during the appeal. The Federal Circuit affirmed the award as to AMC, but reversed as to Jaroslawicz. Magnetic snap fasteners typically consisted of two halves a male half and a female half both having a rivet in the middle. In one of the preferred embodiments of the patentin-suit, the female half had a magnetic rivet positioned below a plate creating an opening for the male rivet to snap into place. The patent-in-suit said that once snapped into place, the two halves created a magnetic circuit. Claim 1 required a small hole in one of the rivets allegedly increasing magnetic attraction. In Fig. 1: F.3d 817 (Fed. Cir. 2010)(Opinion by Circuit Judge Gajarsa, joined by Circuit Judge Archer, concurring opinion by Chief Judge Rader)(appeal from the United States District Court for the Southern District of New York in case no. 98-CV-7766, Judge Paul A. Crotty). 83

91 holes are shown running through female half 32 and male half 35. The district court construed the last element of claim 1 to cover a magnetic snap fastener in which the magnet causes lines of magnetic flux to pass through at least the outer sides of the rivet in the female half, and the small hole(s) in one or both rivets modifies their resistance to the flux and thereby increases the magnetic attraction. Thus, claim 1, as so construed, covered fasteners with rivet holes that increased magnetic attraction, but not rivet holes that did not increase magnetic attraction. The parties did not dispute that construction. According to the Federal Circuit, [i]n an attempt to prove its claims, AMC submitted re-constructed evidence, presented contradictory testimony, and engaged in evasive litigation tactics. 194 For example, AMC submitted an expert report from a Dr. Ratnum opining that the patent-in-suit covered Romag s fasteners, and that Dr. Ratnum had performed a magnetic finite element analysis that produced images showing the magnetic flux of magnetic rivets with and without a hole. Dr. Ratnum concluded that [t]he pictures obtained from the well established [finite element] analysis do not lie and it appears, the hole has a dramatic effect of increasing the flux in the center rivet. Dr. Ratnum did not disclose, however, that he had not performed the analysis. Dr. Ratnum subsequently identified Brian Bell as having performed the analysis. Romag then requested through discovery that AMC produce communications between Dr. Ratnum and Bell. In response, AMC s trial counsel, Mr. Jaroslawicz, withdrew Dr. Ratnum as an expert based on [i]rreconcilable differences and refused Romag s request. The district court, though, ordered AMC to produce Bell s reports, and one of Bell s memos to Dr. Ratnum directly contradicted Dr. Ratnum s expert report. Bell wrote: The results were the same, the no hole part had the most force. * * * This does not help your case. With respect to the alleged inequitable conduct, which concerned disputed inventorship, as well as the alleged litigation misconduct, AMC had moved for summary judgment on some of Romag s defenses, including an unclean hands defense based on Romag s assertion that Irving Bauer, AMC s president, had misrepresented to the PTO that he was the sole inventor of the patent-in-suit. A former employee, Robert Riceman, claimed that he had invented the fastener of the patent-in-suit. In a previous lawsuit, Riceman had settled the claims of inventorship and had agreed not to voluntarily assist anyone litigating against Bauer. The district court directed Romag to subpoena Riceman and depose him, which Romag did. At the subsequent deposition, Riceman contradicted Bauer s explanation of how Bauer had come to invent the fastener of the patent-in-suit. According to the opinion, Bauer had testified that he had become interested in magnetic fasteners when an acquaintance, Alexander Fischer, had solicited him in 1992 about investing in the magnetic snap fastener business. Bauer testified that he and Fischer F.3d at

92 intended to acquire two U.S. patents (the 891 and 294 patents) covering such fasteners. Bauer said that before he invested he experimented with some fasteners at home and was able to design around the 294 patent through a series of experiments which the district court deemed difficult-to-follow. In one, for example, Bauer asserted that a nail in which he had drilled a small hole when adhered to a plate carried more weight than a nail without a hole. Again, according to the opinion, Bauer and Fischer formed a company RRNY and acquired the 294 patent. However, at that time, Fischer s prior company, Amsco, had acquired the 891 patent, although Amsco subsequently assigned the 891 patent to RRNY. Because he had an ownership interest in two magnetic snap fastener patents, Bauer said that he waited approximately three years after conception to file the application maturing into the patent-in-suit. Riceman, on the other hand, testified that he had invented the snap fastener of the patent-in-suit. He testified that he had become an employee of RRNY, and that Bauer and Fischer became alarmed when the law firm Darby & Darby announced that it was aiding the handbag industry to design around the 294 patent. Riceman testified that he told Bauer and Fischer about a 1992 design that would avoid the 294 patent and predate the designaround attempt. Riceman testified that Bauer and Fischer decided to patent Riceman s design to protect their investment, but did not list Riceman as a co-inventor because the terms of his consulting agreement with a former company would have caused the invention to be assigned that former company s owner. Although Riceman knew of the consequences, Riceman wrote a letter in 1994 to the attorney prosecuting the patent-in-suit asserting that he, not Bauer, should be listed as the inventor. However, shortly thereafter, Bauer and Riceman authored a joint letter to the prosecuting attorney directing him to list Bauer as the sole inventor. Riceman testified that he signed the letter out of duress because he had been threatened with termination. Comment: It appears that the district court did not fully consider the import of that letter. The Federal Circuit panel majority concluded that the district court had considered that letter, but had not expressly discussed it. Chief Judge Rader in his concurring opinion was more direct: Although I would not approve the district court s failure to explicitly consider Mr. Bauer s and Mr. Riceman s joint letter to the prosecuting attorney, * * * I perceive my colleagues to be saying that the district court s error was harmless. In light of the entire record, I agree with that conclusion. 195 The point is, that joint letter had a potential impact on the intent prong of the inequitable conduct analysis F.3d at 835 (Rader, C.J., concurring). 196 From Chief Judge Rader s concurrence: see Highway Equip. Co. v. FECO, Ltd., 469 F.3d 1027, 1037 (Fed. Cir. 2006) (affirming finding of no intent where the record shows that, at the time the patent was filed, [an alleged joint inventor] indicated that he should not be named as an inventor. ). 85

93 That was ultimately overshadowed, however, by AMC s response to Romag s contention that Riceman was the inventor of the fastener of the patent-in-suit, that included alleged reconstructed evidence as recounted in the Federal Circuit s opinion, and summarized below. Also, as discussed more fully in a comment at the end hereof, AMC apparently produced the alleged reconstructed evidence in response to documentary evidence supporting Riceman s claim of inventorship. Although that is not discussed in the Federal Circuit s opinion. According to the Federal Circuit s opinion, AMC submitted two documents in an attempt to corroborate Mr. Bauer s claim of inventorship. Again, as addressed in the comment above, AMC had no obligation to submit corroborating evidence of Bauer s sole inventorship the patent-in-suit naming Bauer as the sole inventor was entitled to a statutory presumption of validity which threw the burden on Riceman to disprove the same and by a clear and convincing level of proof. The first was a 1993 invoice from a machine parts manufacturer that demanded payment for several magnetic snap fastener prototypes. Romag challenged the authenticity of the invoice, and Bauer admitted at trial that the invoice was not the original but one that he had drafted and reconstructed. The second was an invoice from a law firm for patent prosecution services for the patent-in-suit. According to the Federal Circuit s opinion, AMC later conceded that invoice had also been reconstructed, but that admission came after Romag had identified the document s defect in its summary judgment reply brief. According to the Federal Circuit s opinion, AMC had submitted more reconstructed evidence at trial. For example, AMC had submitted some very poor, essentially illegible copies of sketches that Mr. Bauer allegedly made of the invention for Mr. Fischer in 1992, but Bauer s notations on those sketches were illegible. AMC then submitted a copy of the copy of the original sketch on which additional notations were made, most of them apparently restating, in clearer block letters, the original notations. Bauer testified at trial that he had created the enhanced version in 2004 after the original was alleged partially destroyed in a flood. However, the notations conflicted with Bauer s testimony. On the enhanced version, Bauer wrote: HOLE IN MIDDLE RIVIT [SIC] DON T PAY FOR 294 TO MITCH. MITCH refered to Mitchell Medina, who Bauer apparently believed owned the 294 patent when he made the sketch. Bauer testified, however, that he purchased the 294 patent from Tamoa Morita, not Medina, but failed to submit evidence documenting the purchase. Also, according to the Federal Circuit s opinion, Bauer s notation suggesting that purchasing the 294 patent was unnecessary, was undermined by Bauer and Fischer s acquisition of the 294 patent. 86

94 On appeal, the Federal Circuit characterized AMC as presenting a broad and scattered challenge to the district court s finding that the 773 patent is unenforceable based on inequitable conduct. 197 The Federal Circuit first concluded that the district court had not erred in finding that Bauer had withheld highly material information when he concealed the most critical information: he was not the inventor he claimed to be. 198 The Federal Circuit noted that information regarding inventorship is always material: As a critical requirement for obtaining a patent, inventorship is material. 199 Second, the Federal Circuit held that the district court had not erred in finding that Bauer intended to deceive the PTO by claiming that he invented the 773 patent s fastener. 200 In particular, the Federal Circuit concluded that the district court s findings indicating that Bauer was not the true inventor supported a finding of intent to deceive as well: While the district court could have restated all of its relevant factual findings before explicitly inferring intent, * * * we believe that the district court s findings showing that Mr. Bauer was not the true inventor support its finding of intent to deceive. For example, the district court found (1) that Mr. Bauer was either unable or unwilling to articulate [his] claimed invention during his deposition, directing opposing counsel to read the patent, * * *; (2) that Mr. Bauer offered difficult-to-follow explanations of the magnetic strength experiments he performed when he claimed to have conceived of the invention, * * *; (3) that Mr. Bauer submitted multiple sketches of his invention that he was forced to later admit were reconstructed after Romag challenged their authenticity, * * *; (4) that Mr. Bauer could not offer any scientific or technical explanation of his own patent, even though the only allegedly patentable claim is based on scientific principles of magnetism, * * *; and (5) that Mr. Bauer offered an evasive, argumentative, and at times contradictory testimony on his status as inventor, * * *. 201 The Federal Circuit wrote that [b]ased on these facts, we cannot fault the court for finding that Mr. Bauer s testimony bore clear indicia of fabrication. * * * Especially when Mr. Bauer fabricated evidence to support his claim of inventorship, we find it difficult to F.3d at F.3d at 830, quoting the district court s findings F.3d at 830, quoting PerSeptive Biosystems, Inc. v. Pharmacia Biotech, Inc., 225 F.3d 1315, 1321 (Fed. Cir. 2000) F.3d at F.3d at

95 fault a district court in finding that the single most reasonable inference able to be drawn from the evidence is that Mr. Bauer intended to deceive the PTO. 202 The Federal Circuit noted that the district court, in finding an intent to deceive, did not expressly weigh the letter Bauer and Riceman had sent to the prosecuting attorney, but also noted that the district court was clearly aware of the letter. The Federal Circuit concluded that although the district court should have expressly mentioned the letter in its consideration of intent, the district court did not commit clear error by failing to do so. The Federal Circuit also expressly noted that it was not placing any weight on Riceman s testimony regarding Bauer s perceived financial motives for designing around the 294 patent, finding that portion of Riceman s testimony unreliable. The Federal Circuit further held that the district court had not abused its discretion in finding that Mr. Bauer s deceit justified holding the 773 patent unenforceable. When an applicant falsely claims that he has invented a device, he can hardly claim the right to enforce a patent to which he was never entitled. 203 Comment: The Federal Circuit thus concluded that the patent-in-suit was unenforceable because Bauer had falsely claimed that he had invented the fastener of the patent-in-suit. The Federal Circuit relied on the same assertion vis-à-vis materiality, i.e., the Federal Circuit concluded that Bauer had withheld highly material information when he concealed the most critical information: he was not the inventor he claimed to be. The Federal Circuit further relied on the same assertion vis-à-vis intent, i.e., Bauer intended to deceive the PTO by claiming that he invented the 773 patent s fastener. Without in any way condoning or appearing to condone the litigation conduct outlined in the opinion and summarized above, was it a proven fact that Bauer had made false claims to the PTO? Those claims would only be false if the trial court had determined that Riceman was the true inventor. Indeed, AMC had argued that the district court erred by failing to determine inventorship under the standards of 35 U.S.C. 102(f) when finding that AMC committed inequitable conduct. AMC argued that an inequitable conduct finding based upon an alleged false oath of inventorship necessarily requires that the issue of inventorship first be determined. The Federal Circuit, though, responded that AMC s argument is not supported by this court s decisions, and [w]e have held that when named inventors deliberately conceal a true inventor s involvement, the applicants have committed inequitable conduct and the patent is unenforceable even as to an innocent co-inventor, 204 citing Frank s Casing Crew & Rental Tools, Inc. v. PMR Techs., Ltd. 205 The Federal Circuit noted that in Frank s Casing, the court had held that the named inventors had committed inequitable F.3d at F.3d at F.3d at F.3d 1363, (Fed. Cir. 2002). 88

96 conduct when they deliberately excluded an innocent co-inventor. The patent was unenforceable even by the innocent co-inventor. The Federal Circuit viewed the current case as analogous: As in Frank s Casing, the district court here had no obligation to resolve inventorship for the purposes of holding the patent unenforceable. * * * The only substantive difference between this case and Frank s Casing is that we have no reason here to remand to the district to resolve inventorship as no party has sought to correct inventorship under 35 U.S.C While it is true in Frank s Casing that the district court had not fully resolved inventorship, the district court had determined that the omitted individual was either the sole- or a co-inventor. From the Federal Circuit s opinion alone, it would appear that the district court simply did not believe Bauer, and viewed his testimony vis-à-vis inventorship to be a fabrication. That, of course, the district court is entitled to do. It also appears that the district court believed and credited Riceman s testimony vis-à-vis inventorship. That the district court, too, is entitled to do. However, without corroborating evidence, and none is mentioned in the Federal Circuit s opinion, Riceman s testimony alone would have been insufficient to decide that he was the true inventor. It thus would appear from the Federal Circuit s opinion alone that the alleged fabrication of evidence was largely, if not solely, the ground for inferring that Bauer s claim of inventorship was false, as well as inferring intent, and ultimately concluding that the patent-in-suit was unenforceable. As it turns out, although not mentioned in the Federal Circuit s opinion, Riceman did submit corroborating evidence of inventorship. According to the district court s 2007 opinion, Advanced Magnetic Closures, Inc. v. Rome Fastener Corp., 207 addressing certain summary judgment submissions, and under the heading Documentary Evidence, the district court wrote that: Riceman provided a number of documents in support of his claim. His employment agreement with RRNY includes an attached design of four figures which appear all but identical to figures 1-4 of the '773 patent. Riceman testified that he produced this design during the initial invention period. Riceman also presents a set of designs from his laboratory notebook, with a notation that they were started in July 1993 and compiled from prior research and drawings. In addition, he produces a copy of the July 1993 designs with an additional set of new drawings, which he believes he made after leaving Randolph Rand. The drawings contained in these two documents are essentially identical to the figures included in the '773 patent. Riceman also produced a letter from Novais dated August 5, 1994 that discussed the draft claims for the '773 patent and included copies of Riceman's drawings F.3d at U.S. Dist. LEXIS *12 (S.D.N.Y. 2007). 89

97 The district court also, in denying AMC s motion for partial summary judgment on Romag s affirmative defenses and counterclaims related to improper inventorship, concluded that, drawing all inferences in Romag s favor as the non-moving party, there were ample reasons to conclude that Riceman was the true inventor: Advanced Magnetic Closures, Inc. v. Rome Fastener Corp., 208 Drawing all inferences in favor of Romag as the non-moving party, a reasonable fact-finder could find that Riceman's claim of inventorship is proved by clear and convincing, corroborated evidence. Riceman presents apparently contemporaneous documentary evidence of invention that a factfinder could reasonably find to be authentic. Moreover, the inclusion of drawings essentially identical to the '773 patent application figures in Riceman's employment agreement with RRNY presents substantial circumstantial evidence of his inventorship. AMC offers no plausible explanation for attaching drawings of Bauer's invention to Riceman's contract. In light of these facts, Riceman's extensive and undisputed involvement in the preparation of the patent application also suggests that he, and not Bauer, was the source of the invention. 209 The district court also noted the paucity of contradictory evidence provided by Bauer: The plausibility of Riceman's assertions is enhanced by the paucity of contradictory evidence produced by Bauer. Riceman is able to discuss his purported invention at length, while Bauer appeared unable to provide even a bare bones explanation. Riceman provides a laboratory notebook with extensive drawings that appear to have been directly incorporated into the patent application, while Bauer's best documentary evidence is a copy of a poorly drawn sketch that bears little resemblance to the patent figures. The A-C La Cava and Oblan, Spivak evidence, even if genuine, is not inconsistent with Riceman's inventorship. It is hardly surprising that Bauer would pay for prototypes and patent prosecution fees when he was to be the named inventor and chief beneficiary of the patent. 210 Accordingly, the district court denied AMC s motion for partial summary judgment. The district court also, though, denied Romag s cross-motion for summary judgment finding that there were unresolved genuine issues of material fact in dispute U.S. Dist. LEXIS *12 (S.D.N.Y. 2007). 209 Advanced Magnetic Closures, Inc. v. Rome Fastener Corp., 2007 U.S. Dist. LEXIS *18 (S.D.N.Y. 2007). 210 Advanced Magnetic Closures, Inc. v. Rome Fastener Corp., 2007 U.S. Dist. LEXIS *18-19 (S.D.N.Y. 2007). 90

98 In the district court s 2008 opinion 211 which led to the current appeal, the court relied on the materials that had been previously submitted during summary judgment briefing, and concluded that it was convinced beyond a shadow of a doubt that Bauer could not be the inventor of the fastener: The Court found Bauer's testimony regarding his purported invention completely incredible. At no point in Bauer's rambling, often-incoherent testimony did he offer any scientific or technical explanation for the claimed increase in magnetic attraction caused by the hollow post. Nor did he present any evidence to substantiate this claim. * * * The Court refuses to believe that Bauer, lacking any training or experience in the field, and equipped only with curiosity and pluck, was able to successfully design around the industry standard '294 Patent. His testimony bore clear indicia of fabrication. While voluble--if not responsive--on direct, he was evasive and argumentative on cross examination. The Court is convinced beyond a shadow of a doubt that Bauer could not be the inventor of the '773 snap. 212 Thus, although the district court did not expressly decide the issue of inventorship, the court had previously concluded that Riceman s testimony and documentary evidence was credible and persuasive. The district court here concluded that Bauer s testimony and documentary evidence was not. As noted at the outset, the district court had awarded attorney s fees against AMC s attorneys as well as AMC. Abelman subsequently settled with Romag. And the Federal Circuit reversed the award against Jaroslawicz. The Federal Circuit noted that Second Circuit law, a court may award attorney s fees under 1927 only after finding clear evidence that (1) the offending party s claims were entirely without color, and (2) the claims were brought in bad faith that is, motivated by improper purposes such as harassment or delay. Second Circuit law also required factual findings having a high degree of specificity. The Federal Circuit concluded that the district court s findings of fact vis-à-vis Jaroslawicz s alleged bad faith simply did not meet Second Circuit standards. 211 Advanced Magnetic Closures, Inc. v. Rome Fastener Corp., 2008 U.S. Dist. LEXIS (S.D.N.Y. 2008). 212 Advanced Magnetic Closures, Inc. v. Rome Fastener Corp., 2008 U.S. Dist. LEXIS *27-28 (S.D.N.Y. 2008). 91

99 2. Not Inferred a) Disclosing Test Data on Closest Structurally Similar Compounds as Requested by Examiner While Not Disclosing Test Data on Other Structurally Similar Compounds Fails to Meet Thresholds of Either Materiality or Intent to Deceive: Evidence of Materiality and Intent Are Only Weighed After Threshold Showings Have Been Made In AstraZeneca Pharmaceuticals LP v. Teva Pharmaceuticals USA, Inc., 213 the Federal Circuit again emphasized the requirement for showing threshold levels of materiality and intent before the two can be balanced. AstraZeneca s patent-in-suit was drawn to an antipsychotic drug quetiapine, marketed as SEROQUEL, having the following structural formula: The drug was an atypical antipsychotic drug, meaning that, unlike typical antipsychotic drugs, quetiapine did not produce involuntary body movements such as torsion spasms, muscle spasms, and the like. Undesirable side effects were not unusual for antipsychotic drugs. An earlier atypical drug, clozapine, was withdrawn from the market after it was discovered to cause a potentially deadly reduction in white blood cell count known as agranulocytosis F.3d 766 (Fed. Cir. 2009)(Opinion by Circuit Judge Newman, joined by Circuit Judges Rader and Prost)(appeal from the United States District Court for the District of New Jersey in consolidated Case Nos. 05-CV-5333, 06-CV-1528, 07-CV-1632, and 07-CV-3001, Judge Joel A. Pisano). 92

100 Teva and Sandoz, Inc. (collectively Teva) had filed ANDAs, along with a paragraph IV certification, for approval to sell their versions of quetiapine. Teva asserted that the patent-in-suit was unenforceable due to inequitable conduct because AstraZeneca had failed to disclose test data for four structurally similar compounds: AstraZeneca disclosed patents and a research paper covering those compounds to the PTO in an IDS. AstraZeneca did not, however, disclose internally developed test data on those compounds. The district court granted AstraZeneca summary judgment of no inequitable conduct. On appeal, the Federal Circuit affirmed. During prosecution, the examiner cited Schmutz II (which AstraZeneca had disclosed in its IDS, and which Compound 24028) as the primary reference, but deemed another disclosed compound, Schmutz X, as being the closest structurally similar compound. The examiner relied on a secondary reference, Horrom, in asserting obviousness. The Schmutz X and Horrom compounds had the following structure: In response, AstraZeneca argued that the physiological property atypicality was unpredictable, the prior art provided no motivation to make quetiapine for that property, and there was a long-felt need for such a drug because no suitable replacement for clozapine was available in the United States. The examiner, however, continued the rejection and requested comparative test data for the Horrom and Schmutz X compounds. AstraZeneca responded with a Migler 93

101 declaration disclosing preexisting test data for the Horrom compound and a Schmutz B compound. AstraZeneca explained that it did not have preexisting test data for the Schmutz X compound, that it would be expensive to produce such data, and that the inventors believed that the Schmutz B compound was closer to quetiapine than Schmutz X. Schmutz B and Schmutz X had the following structures: The Migler declaration also averred that the Horrom and Schmutz B compounds exhibited typical properties. The Migler declaration further disclosed data for a Schmutz A compound that showed it was inactive for antipsychotic activity. Teva contended that the Migler declaration was deliberately misleading in disclosing data only for the two compounds that the examiner had relied upon while withholding test data on the other four compounds above indicating those compounds had potential atypical antipsychotic activity. The Federal Circuit disagreed. AstraZeneca argued that it had properly focused on the prior art compounds that were structurally closest to quetiapine, and that its test data showed that those compounds were not atypical. AstraZeneca noted that was the comparison requested by the examiner. AstraZeneca urged that it had never represented to the examiner that quetiapine s atypical properties were unique among structurally similar compounds, and it had disclosed references describing potentially atypical antipsychotics, i.e., perlapine, fluperlapine, compound 24028, and compound There was no evidence that AstraZeneca had test data for Schmutz X. However, Teva argued that the structural similarity between Schmutz X and Compound indicated that AstraZeneca should have disclosed the test data for Compound The Federal Circuit, however, noted that structural similarity was not a predictor of whether antipsychotic behavior would be typical or atypical, i.e., the properties varied significantly with minor structural changes. The Federal Circuit concluded that [t]he Appellants made no showing as to whether the structural similarity between Schmutz X and Compound would establish whether Schmutz X would have atypical properties. In the context of the knowledge in this field, as reflected in the various references, AstraZeneca s provision of its existing test data for Schmutz B, instead of preparing and testing Schmutz X, cannot constitute a material misrepresentation The figures are taken from the opinion. The figures for Schmutz X and Compound appear to be the same. Accordingly, there may be an error in the opinion F.3d at

102 The Federal Circuit also concluded that Schmutz B was closer structurally to quetiapine than Compound 24028: The Federal Circuit concluded that [a]ccordingly, AstraZeneca s substitution of Schmutz B in place of Schmutz X was not a material misrepresentation, and the non-provision of the data on Compound 24028, which is structurally less similar to quetiapine, was not a material omission. 216 Teva also argued that AstraZeneca s disclosure of test data for Schmutz B along with test data for Schmutz A was an implied misrepresentation because AstraZeneca had not submitted test data for the four compounds listed at the outset, i.e., fluperlapine, perlapine, Compound 21076, and Compound The Federal Circuit disagreed noting that AstraZeneca had not asserted that no other prior art compound was atypical, but rather responded to the examiner s rejection by demonstrating that the closest prior art compounds did not have the same properties as quetiapine. On the issue of intent, Teva argued that the withheld data had a high degree of materiality, and that therefore a proportionally lesser showing of intent to deceive was necessary to establish the requisite threshold level of intent. The Federal Circuit responded: That is incorrect, and explained that [e]vidence of mistake or negligence, even gross negligence, is not sufficient to support inequitable conduct in patent prosecution. * * * To establish the requisite deceptive intent, the involved conduct, viewed in light of all the evidence, including evidence indicative of good faith, must indicate sufficient culpability to require a finding of intent to deceive. * * * While the court must, as the final step, weigh and balance the findings of materiality and intent, this presupposes that a threshold level of both of these elements has already been established by clear and convincing evidence. 217 The Federal Circuit noted that the only evidence Teva relied on for intent was AstraZeneca s internal knowledge of certain compounds of this structural class that were atypical, without including this information in the IDS. The Federal Circuit rejected that as sufficient for inferring intent explaining that [t]he law is clear that inequitable conduct requires not intent to withhold, but rather intent to deceive. Intent to deceive cannot be inferred simply from the decision to withhold [information] where the reasons given for the withholding are plausible. * * * As argued by Appellants, an applicant would not know how F.3d at F.3d at

103 much of its research effort must be filed with the PTO, although of no interest to the examiner, or run the risk of accusation of wrongdoing no matter where the line is drawn. 218 b) Intent Cannot be Inferred Simply From Non- Disclosure Even If The Reference is Highly Material In Optium Corp. v. Emcore Corp., 219 the Federal Circuit reiterated that the materiality of a non-disclosed reference even if the reference is deemed highly material is not alone sufficient to presume intent to deceive. However, a concurrent-in-result opinion by Circuit Judge Prost indicates that there remain divisions among the Federal Circuit on when intent may be inferred. The Emcore patents-in-suit were drawn to optical communication systems in which a laser transmits a signal in the form of a light wave along an optical fiber. The patents were each entitled Method and Apparatus for Optimizing SBS Performance in an Optical Communication System Using at Least Two Phase Modulation Tones. The term SBS was an acronym for stimulated Brillouin scattering, i.e., interference that limited the amount of power that could be transmitted over fiber-optic lines. That, in turn, limited the distance over which information could be transmitted. The patents were drawn to minimizing that SBS interference. The invention of the two patents-in-suit was said to improve on known techniques for phase modulation by optimizing SBS suppression through a method in which an operational region of SBS suppression is established as a function of the phase modulation of the light such that the operational region identifies combinations of first and second phase modulation levels at which optimum SBS suppression is achieved for the first and second tones. The phase modulation levels were power levels at which each radio frequency tone was applied. Based on that operational region, the first and second phase modulation levels are adjusted such that the system operates with optimum SBS suppression F.3d at F.3d 1313 (Fed. Cir. 2010)(Opinion by Circuit Judge Newman, joined by Circuit Judge Mayer, concurring in result opinion by Circuit Judge Prost)(appeal from the United States District Court for the Western District of Pennsylvania in Case no. 07-CV-1683, Chief Judge Donetta W. Ambrose). 96

104 The patents described how the operational region could be expressed in the form of a contour map as shown in Fig. 2: in which contour lines represented an SBS threshold level, i.e., the maximum power level at which the optical signal could be transmitted without encountering SBS interference. In Fig. 2, for example, region 114 is illustrated as a local peak that thus indicates an operating region in which the corresponding power levels for two phase modulation tones result in high SBS suppression. The contour map allowed identification of other less steep and narrow regions, such as region 128. The basis for the charge of inequitable conduct arose from Emcore s failure to disclose an article by F.W. Willems, and two other co-authors, entitled Harmonic distortion caused by stimulated Brillouin scattering suppression in externally modulated lightwave AM- CATV systems, published in ELECTRONICS LETTERS, (1994). Willems disclosed a singletone phase modulation, and discussed the kinds of intermodulation distortion that could be caused by the larger spectral width that results from separation of a light signal into sidebands. Willems disclosed that the distortion was virtually eliminated when single-tone phase modulation was applied at a frequency above twice the highest cable television subcarrier frequency. Willems did not discuss two-tone phase modulation, and did not show a contour map or the use of a contour map to identify optimal SBS suppression regions. Emcore does not dispute that the inventors were aware of Willems. The article was cited in the background section of an internal research report, and was referenced in an invention disclosure form in a section titled Background information on the invention, in response to the question: C. What were the previous methods or apparatus that were used but failed to solve the problem? (Give source of previous information on the subject that is closest to your invention, such as known use, publication or patents.) 97