General Publications December 7, 2012

Federal Circuit Patent Case Summaries for the Week Ending December 7, 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 December 7, 2012
Labriah Lee and Michele Glessner prepared the summaries in this issue.

Case Summaries

Claim Interpretation: Ordinary Meaning
Claim Interpretation: Intrinsic Evidence: Specification
Infringement: Doctrine of Equivalents: Generally
Deere & Co. v. Bush Hog, LLC, et al., Nos. 11-1629, -1630, -1631 (Fed. Cir. (S.D. Iowa) Dec. 4, 2012). Opinion by Rader, joined by Newman and Plager.

In holding that the U.S. District Court for the Southern District of Iowa erroneously construed the claim phrase “into engagement with” to require direct contact, the Federal Circuit vacated that construction, reversed the lower court’s grant of summary judgment, and remanded for further proceedings.

Deere & Co.’s (“Deere”) U.S. Patent No. 6,052,980 is directed to an “easy clean dual wall deck” for a rotary cutter. Deere sued competitors Bush Hog, LLC and Great Plains Manufacturing, Inc. for infringement in the lower court. After construing several claim terms, the district court granted motions for summary judgment of noninfringement and noted that Deere could not assert infringement under the doctrine of equivalents based on its construction of the phrase “into engagement with” in the claims. Deere appealed.

The Federal Circuit affirmed the construction of “rotary cutter deck” and the determination that the claim phrases “substantially planar” and “easily washed off” did not render the asserted claims invalid under 35 U.S.C. § 112. The Federal Circuit, however, held that the district court’s construction of the phrase “into engagement with” as requiring direct contact between upper and lower deck walls was incorrect. The Federal Circuit noted that the claim language itself counseled against a narrow interpretation of the term considering its ordinary and customary meaning. The court also noted that the specification described embodiments that did not require direct contact.

Further, the Federal Circuit recognized that the district court’s treatment of the doctrine of equivalents revealed a common misperception regarding “vitiation,” noting that the concept of vitiation derives from the requirement that the doctrine of equivalents must be applied to the claims “on an element-by-element basis,” so that every claimed element of the invention—or its equivalent—is present in the accused product. The court explained that “vitiation” is not an exception to the doctrine of equivalents, but instead is a legal determination that the evidence would preclude a reasonable jury from determining that two elements are equivalent. In this case, the district court had construed “contact” to require “direct contact,” and thus found that allowing “no direct contact” would vitiate the court’s construction. Yet, the Federal Circuit noted that a reasonable jury could find that a small spacer connecting the upper and lower deck walls represents an insubstantial difference from direct contact, and thus held that the district court erred by invoking the vitiation exclusion in this context.  

Litigation Practice and Procedure: Prior Adjudication: Claim Preclusion (Res Judicata)
Litigation Practice and Procedure: Generally
Cummins, Inc. v. TAS Distributing Co., No. 10-1134 (Fed. Cir. (C.D. Ill.) Dec. 5, 2012). Opinion by Reyna, joined by Newman and Bryson.

The Federal Circuit affirmed the U.S. District Court for the Central District of Illinois’s grant of summary judgment that Cummins, Inc.’s (“Cummins”) declaratory judgment suit against TAS Distributing Company, Inc. (“TAS”) was barred by the doctrine of res judicata, holding that Cummins could have asserted invalidity and unenforceability in prior litigation, which featured the same parties, arose from the same set of operative facts, and resulted in a final resolution on the merits.

The dispute in this case was based on a 1997 license agreement between TAS and Cummins, in which TAS licensed its patented diesel engine technology to Cummins. The license agreement provided that Cummins would pay royalties and “make all reasonable efforts to market and sell” the patented technology to increase the royalties. In 2003, TAS filed a declaratory judgment action alleging breach of the agreement. TAS filed a second lawsuit in 2007 relating to breach of the agreement, and in 2009 Cummins filed its own lawsuit against TAS with respect to the same agreement. The lower court granted TAS’s motion for summary judgment barring all of Cummins’s claims for declaratory relief based on the doctrine of res judicata because the claims should have been asserted in the first suit by TAS against Cummins.

Cummins appealed to the Federal Circuit, and the Federal Circuit affirmed. The Federal Circuit applied the law of the regional circuit to the res judicata issue and ruled that, under Illinois law, it was appropriate to bar Cummins’s claims. As an initial matter, the court held that there was no jurisdictional bar that would have prevented Cummins from asserting patent-based defenses in response to TAS’s declaratory judgment action in the first suit against Cummins and that, in any event, Cummins could have raised its patent-based defenses in response to TAS’s contract claims and did not do so. Second, the Federal Circuit held that Cummins could have asserted patent-based defenses in response to TAS’s contract claims because they arose from a single set of operative facts. The Federal Circuit also noted that a defendant who fails to assert a counterclaim is precluded from bringing a subsequent action based on the counterclaim if nullification of the prior judgment would result. Finally, the Federal Circuit agreed with the district court that neither a declaratory judgment exception nor a misrepresentation exception applied in this case. Accordingly, the Federal Circuit held that Cummins’s claims were barred by the doctrine of res judicata.  

Patent Office Procedures: Reissue: Generally
Patent Office Procedures: Prosecution Before the Office: Prosecution of Applications: Generally
In re Yamazaki, No. 12-1086 (Fed. Cir. (B.P.A.I.) Dec. 6, 2012). Opinion by Lourie, joined by Reyna and Krieger (sitting by designation).

The U.S. Court of Appeals for the Federal Circuit affirmed the Board of Patent Appeals and Interferences’s (“Board”) decision upholding the rejection of a U.S. reissue application for lack of correctable error. The Federal Circuit held that reissue proceedings cannot be used to withdraw a terminal disclaimer from an issued patent.

In 1995, Shunpei Yamazaki (“Yamazaki”) filed a patent application with claims that were rejected during prosecution based on an earlier patent issued to Yamazaki. In response, Yamazaki filed a terminal disclaimer disclaiming the statutory term of any patent granted on the application that would extend beyond expiration of the earlier patent. Yamazaki later amended each claim of the application such that, in Yamazaki’s view, the pending claims became patentably distinct over the claims of the earlier patent and the terminal disclaimer became unnecessary. Yamazaki filed a petition to withdraw the terminal disclaimer, which the U.S. Patent and Trademark Office (“PTO”) did not act upon. Prosecution continued, and a Notice of Allowance was issued in July of 2000. Although the petition to withdraw was still pending, Yamazaki paid the issue fee, and the application issued as a patent in 2001 with a term of only 35 months as a result of the terminal disclaimer. After issuance of the patent, the PTO dismissed the petition to withdraw. Yamazaki’s request for reconsideration was denied, and Yamazaki filed a reissue application to correct “errors” that rendered the patent inoperative during part of the statutory term. The examiner rejected the application for reissue as defective for failing to recite a correctable error. The Board affirmed the rejection, and Yamazaki appealed.

The Federal Circuit affirmed the Board’s decision, holding that when a patent issues with its terminal disclaimer in effect, that disclaimer becomes part of the “original patent” for purposes of 35 U.S.C. § 251 and serves to define its term, regardless of any further term that might have been otherwise available in the absence of the disclaimer. Thus, because the patent had already issued, the PTO did not have the authority to nullify the terminal disclaimer through reissue proceedings and, thus, correctly rejected the reissue application on that basis.

Patentable Invention: Obviousness
Remedies: Generally
Pregis Corp. v. Kappos, et al., Nos. 10-1942, -1532 (Fed. Cir. (E.D. Va.) Dec. 6, 2012). Opinion by Reyna, joined by Prost and Clevenger.

The Federal Circuit affirmed the district court’s decision to deny Free-Flow Packaging International, Inc.’s (“Free-Flow”) motions for judgment as a matter of law regarding obviousness and to dismiss Pregis Corporation’s (“Pregis”) claim for judicial review under the Administrative Procedure Act (“APA”), holding that the APA is not available for challenging U.S. Patent and Trademark Office (“PTO”) decisions to issue patents.

Free-Flow appealed the denial of its motions for judgment as a matter of law after a jury verdict of noninfringement and invalidity of certain claims of multiple patents it owned. Pregis cross-appealed the dismissal of its claim, seeking judicial review of the PTO’s decision to issue certain ones of Free-Flow’s patents under the APA.

The Federal Circuit held that there was substantial evidence to support the factual underpinnings of the jury verdict that Free-Flow’s claims were obvious in view of the prior art. Free-Flow agreed that the prior art disclosed all elements of the asserted claims, but argued that there was no evidence of a reason to combine the references and that the prior art teaches away from the claimed combinations. The Federal Circuit held that the evidence provided by Pregis’s expert witness supported the jury’s findings. The Federal Circuit also held that there was substantial evidence that the prior art did not teach away, noting that the mere fact that the prior art teaches a preferred embodiment does not constitute a teaching away from other reasonable uses. The Federal Circuit also held that Free-Flow’s evidence of commercial success, as a secondary consideration, lacked a nexus with the claimed subject matter, rendering the evidence uninformative as to the issue of obviousness.

Regarding the APA claim, the Federal Circuit held that a potential infringer cannot sue the PTO under the APA to challenge a PTO decision to issue a patent because the Patent Act precludes judicial review and provides adequate remedies to third party challengers.  

Litigation Practice and Procedure: Procedure: Summary Judgment: Rule 11
Litigation Practice and Procedure: Procedure: Summary Judgment: Exceptional Case
Infringement: Generally
Claim Interpretation: Generally
Remedies: Damages: Attorneys’ Fees
Raylon, LLC v. Complus Data Innovations, Inc., et al., Nos. 11-1355, -1356, -1357, -1358, -1359 (Fed. Cir. (E.D. Tex.) Dec. 7, 2012). Opinion by Prost, joined by Moore. Concurring opinion by Reyna.

In holding that the U.S. District Court of the Eastern District of Texas abused its discretion by using a subjective standard to decide a Rule 11 issue, the Federal Circuit affirmed-in-part, vacated-in-part, and remanded the district court’s grant of summary judgment.

Raylon, LLC (“Raylon”) filed three lawsuits against multiple defendants in district court, alleging infringement of claims of its patent relating to a hand-held identification investigating and ticket issuing system. The district court consolidated the lawsuits for a combined hearing on the claim phrase “display being pivotally mounted on said housing.” In that hearing, the court rejected Raylon’s proposed construction of the phrase, which would consider a fixed display that is physically moved by a user to be “pivotally mounted” and instead adopted the defendants’ proposed construction, which excluded from “pivotally mounted” any displays that are fixed or incapable of pivoting. The lower court granted summary judgment in favor of the defendants, but denied their motions for Rule 11 sanctions and attorneys’ fees and costs under 35 U.S.C. § 285. The defendants appealed the denial of sanctions and attorneys’ fees.

With respect to the issue of Rule 11 sanctions, the Federal Circuit applied the law of the regional circuit and held that the district court abused its discretion by applying a subjective standard of review, rather than an objective one, in evaluating Raylon’s conduct. In particular, the court noted that an evaluation of Raylon’s litigation motives has no place in the Rule 11 analysis. Moreover, the court held that the district court abused its discretion by failing to consider some of the defendants’ arguments regarding claim interpretation. The Federal Circuit agreed with the defendants that Raylon’s claim construction and infringement contentions were frivolous and warranted Rule 11 sanctions and, therefore, remanded the case for determination of an appropriate sanction.

Because the district court relied on its Rule 11 analysis to deny attorneys’ fees and costs, the Federal Circuit vacated the district court’s denial, and remanded for the court to reconsider the defendants’ motions.

In a concurring opinion, Judge Reyna stressed that when a court finds a Rule 11 sanction based on conduct involving an allegation and pursuit of patent infringement claims, that the court is compelled, if so moved by a party, to undertake a detailed and thorough § 285 inquiry and analysis. Judge Reyna would have reversed and declared this an exceptional case, limiting the remand to a determination of the appropriate sanctions to apply.  


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