Patent Case Summaries August 17, 2012

Federal Circuit Patent Case Summaries for the Week Ending August 17, 2012

Alston & Bird LLP's weekly Federal Circuit Patent Case Summaries are published by Wolters Kluwer Law & Business as part of its Aspen Publishers product line. The following is a summary of the precedential patent-related opinions issued by the Court of Appeals for the Federal Circuit for the week ending on the date below.

Patent Case Summaries for the Week Ending August 17, 2012
Chris McArdle and Wes Achey prepared the summaries in this issue. 


Case Summaries

Patentable Invention: Obviousness: Scope and Content of Prior Art
Patentable Invention: Obviousness: Secondary Considerations of Nonobviousness
Kinetic Concepts, Inc., et al. v. Smith & Nephew, Inc., No. 11-1105 (Fed. Cir. (W.D. Tex.) Aug. 13, 2012). Opinion by O’Malley, joined by Bryson. Concurring opinion by Dyk.

In reversing the district court’s judgment as a matter of law that Smith and Nephew, Inc. (“S&N”) had proved by clear and convincing evidence that the patent claims were invalid as obvious, the Federal Circuit held that (1) the jury’s “advisory” opinion on the ultimate issue of obviousness gave rise to implied findings of facts that the district court was required to accept; (2) the jury’s implied findings of facts on the Graham factors were supported by substantial evidence; and (3) the ultimate conclusion of obviousness was that the claims were not obvious.

Kinetic Concepts, Inc., KCI Licensing, Inc., KCI USA, Inc., KCI Medical Resources, KCI Manufacturing, and Medical Holdings Limited (collectively “KCI”) and Wake Forest brought suit against S&N, alleging infringement of U.S. Patent Nos. 7,216,651 and 5,645,081. Wake Forest is the owner of the asserted patents, and KCI is the exclusive licensee of the patents. Both patents claim methods for treating difficult-to-heal wounds by applying suction or negative pressure. The U.S. District Court for the Western District of Texas held that the claims of both patents were invalid as obvious under 35 U.S.C. § 103 in view of asserted prior art references.

On appeal, the Federal Circuit held that in view of the jury’s explicit and implicit factual findings, the Graham factors cut against the view that the claimed invention was an obvious combination of known elements from the prior art. Specifically, with respect to the first Graham factor, the scope and content of the prior art, the court held that the references do not disclose the use of maintained negative pressure to treat wounds. The Federal Circuit also held that the jury’s finding implied that it viewed the level of ordinary skill in the art as low. The Federal Circuit held that the jury’s factual finding that there was no reason to combine the prior art references was supported by substantial evidence. The Federal Circuit also held that there was substantial evidence supporting the jury’s findings of “commercial success, long-felt need, copying, unexpected and superior results, wide spread acceptance in the field, and initial skepticism.” In view of the jury’s findings, the Federal Circuit held that S&N had not proven by clear and convincing evidence that the asserted claims were obvious.

http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-1105.pdf 

Claim Interpretation: Intrinsic Evidence: Generally
The Patent Application: Specification: Enablement Requirement
MagSil Corp., et al. v. Hitachi Global Storage Technologies, Inc., et al., No. 11-1221 (Fed. Cir. (D. Del.) Aug. 14, 2012). Opinion by Rader, joined by O’Malley and Reyna.

In affirming the district court’s grant of summary judgment that the claims of the patent-in-suit were invalid for lack of enablement, the Federal Circuit held that the patent’s specification only disclosed a small range of “resistance changes” and did not enable the full scope of the claims that covered “resistance changes” in magnitude “up to infinity.”

MagSil Corporation (“MagSil”) filed suit in December 2008 against several defendants, including Hitachi Global Storage Technologies, Inc., Hitachi America, Ltd., Hitachi Data Systems Corporation, and Shenzhen Excelstor Technology, Ltd. (collectively “Hitachi”), alleging that their disk drive products infringe various claims of U.S. Patent No. 5,629,922 (“the ’922 patent”). The ’922 patent relates to read-write sensors for computer hard disk drive storage systems. After Markman proceedings, the parties filed cross-motions for summary judgment. The U.S. District Court for the District of Delaware held the asserted claims invalid as a matter of law for lack of enablement. The district court then entered final judgment for Hitachi.

On appeal, the Federal Circuit held that the broad claims of the ’922 patent were not supported by the limited disclosures in the specification. Specifically, the asserted claims of the ’922 patent broadly claim any tri-layer tunnel junction wherein applying a small magnitude of electromagnetic energy to the junction causes a change in the resistance by at least 10% at room temperature. Further, the asserted claims cover “resistance changes beyond 120% to infinity.” The court next examined whether the disclosures in the specification teach one of ordinary skill in the art to fully perform the claimed method across the full claimed scope. The court stated that the specification “teaches that the inventors’ best efforts achieved a maximum change in resistance of only 11.8% at room temperature”—not the infinitely high range covered by the claims. The court also stated that even if it were to accept MagSil’s expert’s testimony that the specification would teach someone of ordinary skill in the art how to make tunneling junctions between 100% and 120%, that would not solve MagSil’s enablement problem because the enablement requirement requires that the full scope of the claimed invention be enabled, not just part of that scope.

http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-1221.pdf 

Patent Office Procedures: Reexamination
Claim Interpretation: Intrinsic Evidence: Generally
Patentable Invention: Anticipation: Generally
In re Rambus Inc., No. 11-1247 (Fed. Cir. (B.P.A.I.) Aug. 15, 2012). Opinion by Rader, joined by Linn and Dyk.

The Federal Circuit affirmed the U.S. Patent and Trademark Office (“PTO”) Board of Patent Appeals and Interferences’s (“Board”) finding in a reexamination proceeding that Claim 15 of appellant’s patent was invalid as anticipated by a prior art publication under 35 U.S.C. § 102(b).

In 2005, Rambus sued Hynix Semiconductor, Inc. (“Hynix”) and several other chip manufacturers, including Micron Technology, Inc. in the U.S. District Court for the Northern District of California, alleging infringement of several patents including U.S. Patent No. 6,034,918 (“the ’918 patent”) related to methods of storing and retrieving information from a “memory device.” The district court consolidated the cases and considered the construction of the term “memory device.” The district court initially construed “memory device” broadly as “a device in which information can be stored and retrieved electronically.” Upon reconsideration, the district court clarified that while the memory device is not restricted to a single chip it is “limited in scale to being a component in a memory subsystem.” Thus, the district court’s construction did not include a CPU or memory controller, but instead found that the memory was connected to a bus or larger system.

In 2009, shortly after the district court entered final judgment that Hynix infringed the ’918 patent, Hynix sought ex parte reexamination of Claims 18, 24, and 33 of the ’918 patent. During reexamination, the examiner confirmed the patentability of Claims 24 and 33, but rejected Claim 18 as anticipated by an iAPX 432 Interconnect Architecture Reference Manual published by Intel Corp. in 1982 (“the iAPX Manual”). Specifically, in making his rejection, the examiner construed “memory device” broadly as any “device[] that allows for the electronic storage and retrieval of information.” Under that construction, the memory device was analogous to what was disclosed in the iAPX Manual. The Board affirmed the examiner’s rejection of Claim 18 as anticipated by the iAPX Manual.

On appeal, the Federal Circuit agreed with the Board that the specification of the ’918 patent did not restrict the invention to single chip memory devices. The Federal Circuit also looked to the parties’ expert testimony but found it conflicting and unpersuasive. Next, the court looked to the prosecution history and related patents and noted that “memory device” is a broad term that was used consistently throughout the patent family as related to a device having one or more chips. The Federal Circuit also considered whether “memory device” encompassed devices that perform a control function and, agreeing with the PTO, held that the “memory device” may have a controller that provides logic necessary to receive and output data, but does not perform the control function of a CPU.

Finally, the court held that substantial evidence supported the Board’s decision that Claim 18 of the ’918 patent was anticipated by the iAPX Manual, which contains several chips and a controller that provides logic for the chips to function.

http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-1247.pdf 

Litigation Practice and Procedure: Procedure: Summary Judgment: Sufficiency of Evidence
Litigation Practice and Procedure: Procedure: Admissibility of Evidence
Infringement: Willful Infringement
Meyer Intellectual Properties Ltd., et al. v. Bodum, Inc., No. 11-1329 (Fed. Cir. (N.D. Ill.) Aug. 15, 2012). Opinion by O’Malley, joined by Moore. Concurring opinion by Dyk.

In reversing the district court’s decisions granting summary judgment of infringement, precluding Bodum, Inc. (“Bodum”) from introducing prior art disclosed during discovery or evidence of inequitable conduct, and barring Bodum’s expert from testifying on obviousness, and in vacating the district court’s decisions denying judgment as a matter of law (“JMOL”) that Bodum did not willfully infringe the patents-in-suit and granting enhanced damages and attorneys’ fees to the plaintiff, the Federal Circuit remanded the case for further proceedings based on numerous errors committed by the district court.

In 2006, Meyer Intellectual Properties Limited and Meyer Corporation, U.S. (collectively “Meyer”) sued Bodum in the U.S. District Court for the Northern District of Illinois, alleging that Bodum’s milk frother products infringed two of Meyer’s patents: U.S. Patent Nos. 5,780,087 and 5,939,122. Although Meyer did not offer evidence that Bodum itself performed each step of the claimed method, the district court granted summary judgment that Bodum directly and by inducement infringed at least one of Meyer’s patents. The case proceeded to trial on validity. The district court granted Meyer’s motions in limine (1) barring Bodum’s invalidity expert from testifying; (2) preventing Bodum from relying on documents that it claims are prior art included in its expert’s report; (3) preventing Bodum from presenting an inequitable conduct defense; and (4) preventing Bodum from introducing what Meyer said were “previously undisclosed prior art references.”

After a jury awarded Meyer $50,000, the district court increased the jury’s damage award to $150,000 and awarded Meyer its full attorneys’ fees. The district court also denied Bodum’s post-trial motions seeking JMOL that it did not willfully infringe the patents-in-suit and seeking reconsideration of the summary judgment of infringement based on the Federal Circuit’s pronouncements on divided infringement in the since-vacated decision in Akamai Technologies, Inc. v. Limelight Networks, Inc., 626 F.3d 1311 (Fed. Cir. 2010).

On appeal, the Federal Circuit first reversed the district court’s summary judgment ruling on infringement. Specifically, even though the Federal Circuit held that under a proper claim construction, the claims could be infringed by a single party, the court stated that Meyer failed to point to specific instances of direct infringement by Bodum. The Federal Circuit found “it troubling that the district court based its direct infringement analysis on what it assumed happened, rather than on actual evidence of record.” Likewise, because Meyer presented no evidence that Bodum’s customers used the product, summary judgment was not appropriate.

Next, the Federal Circuit held that by preventing Bodum from introducing prior art evidence, including its own Bodum 3-Cup French Press, at trial, the district court prejudiced Bodum’s ability to present its invalidity defense. The Federal Circuit also held that the district court abused its discretion by excluding Bodum’s expert from testifying at trial. The Federal Circuit noted that because the technology at issue was simple, Bodum’s expert’s reliance on common sense in his report was justified. The Federal Circuit further held that the district court improperly prevented a Bodum employee, whose testimony was supported by corroborating documentation, from testifying about the prior art 3-Cup French Press.

The court next held that the district court improperly converted a motion in limine into a summary judgment motion and did not allow for full development of the evidence, thus depriving Bodum of an opportunity to present a fair inequitable conduct defense. The court stated that it was procedurally improper to dispose of Bodum’s inequitable conduct defense in a motion in limine.

Finally, the Federal Circuit vacated the jury’s finding on willfulness, and vacated the district court’s decisions on enhanced damages and attorneys’ fees.

In a concurrence, Judge Dyk explained that while he agrees with and joins the majority opinion, “in looking at this case from a broader perspective, one cannot help but conclude that this case is an example of what is wrong with our patent system.” Judge Dyk stated that “it would be reasonable to expect that the claims would have been rejected as obvious by the examiner, and, if not, that they would have been found obvious on summary judgment by the district court.”

http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-1329.pdf

Litigation Practice and Procedure: Jurisdiction: Standing
Patentable Invention: Utility: Patentable Subject Matter
The Association for Molecular Pathology, et al. v. Myriad Genetics, Inc., et al., No. 10-1406 (Fed. Cir. (S.D.N.Y.) Aug. 16, 2012). Opinion by Lourie. Opinion concurring-in-part by Moore. Opinion concurring-in-part and dissenting-in-part by Bryson.

On remand from the Supreme Court, the Federal Circuit held that Myriad’s claims to isolated DNA and Myriad’s method claims for screening potential cancer therapeutics fall within the scope of 35 U.S.C. § 101 as patentable subject matter. However, Myriad’s method claims directed to comparing or analyzing gene sequences were not patentable subject matter under § 101.

Plaintiffs, an assortment of medical organizations, researchers, genetic counselors, and patients, brought suit against Myriad Genetics, Inc. and the Directors of the University of Utah Research Foundation (collectively “Myriad”), seeking declaration that various claims from seven patents assigned to Myriad were drawn to patent-ineligible subject matter under 35 U.S.C. § 101. More specifically, the seven patents at issue were U.S. Patent Nos. 5,747,282 (“the ’282 patent”); 5,837,492; 5,693,473; 5,709,999; 5,710,001; 5,753,441; and 6,033,857.

The challenged claims consisted of both composition and method claims. Claim 1 of the ’282 patent is representative of the composition claims and states: “An isolated DNA coding for a BRCA1 polypeptide, said polypeptide having the amino acid sequence set forth in SEQ ID NO:2.” All but one of the challenged method claims cover methods of “analyzing” or “comparing” a patient’s BRCA sequence with the normal, or wild-type, sequence to identify the presence of cancer-predisposing mutations.

In 2010, the U.S. District Court for the Southern District of New York granted Plaintiffs’ motion for summary judgment of invalidity and held that the challenged claims were drawn to nonpatentable subject matter and were thus invalid under § 101. Regarding the composition claims, the district court held that isolated DNA molecules fell within the judicially created “products of nature” exception to § 101 because such isolated DNAs were not “markedly different” from native DNAs. With respect to the method claims, the district court held that they were patent ineligible under the Federal Circuit’s machine-or-transformation test.

In 2011, the Federal Circuit held that the district court had erred in holding that Myriad’s claims directed to isolated DNA were invalid and erred in holding that Myriad’s claims directed to screening potential cancer therapeutics via changes in cell growth rates were invalid. The Federal Circuit upheld the district court’s determination that Myriad’s claims directed to comparing or analyzing gene sequences were invalid.

The Supreme Court subsequently granted certiorari, vacated the Federal Circuit’s 2011 decision, and remanded to the Federal Circuit for rehearing in view of Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289, 1293 (2012).

On remand from the Supreme Court, the Federal Circuit first held that the courts have jurisdiction over the case under the Declaratory Judgment Act because at least one of the Plaintiffs has standing to challenge the validity of Myriad’s patents. Specifically, the court found that one plaintiff clearly alleged a sufficiently real and imminent injury because he stated an intention to actually and immediately engage in allegedly infringing BRCA-related activities.

With respect to the patentability of the composition claims, Judge Lourie, writing for the majority, explained that by removing DNA from the human body, the isolated DNA is necessarily transformed into something new and different that is not found in nature.

Notably, Judge Lourie downplayed the import of the Supreme Court’s recent holding in Mayo with regard to the composition claims, stating that “[t]he principal claims of the patents before us on remand relate to isolated DNA molecules. Mayo does not control the question of patent-eligibility of such claims.”

With regard to the method claims, the majority held that, under Mayo, diagnostic methods that essentially claim natural laws are not patent-eligible. The court renewed its prior holding that Myriad’s claims to “comparing” or “analyzing” two gene sequences fall outside the scope of § 101 because they claim only abstract mental processes.

In dissent, Judge Bryson noted that a gene merely isolated from the human body cannot itself be patentable in the same way that a leaf does not become patentable when it is separated from a tree.

http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1406.pdf  

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