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 December 13, 2013. Kirk Bradley and Chris Ziegler prepared this edition.
Patentable Invention: Obviousness: Scope and Content of Prior Art
Patentable Invention: Obviousness: Secondary Considerations of Nonobviousness
Patentable Invention: Obviousness: Teaching, Suggestion, or Motivation in Prior Art
Galderma Laboratories, L.P., et al. v. Tolmar, Inc., No. 13-1034 (Fed. Cir. (D. Del.) Dec. 11, 2013). Opinion by Prost, joined by Bryson. Dissenting opinion by Newman.
Reversing the district court’s determination that certain claims are not invalid as obvious, the Federal Circuit held that when prior art discloses a range and the claimed invention falls within that range then the burden of production shifts to the patentee to show nonobviousness.
Galderma Laboratories, L.P., Galderma S.A., and Galderma Research and Development, S.N.C. (collectively “Galderma”) sued Tolmar, Inc. (“Tolmar”) for infringement of multiple patents after Tolmar filed an Abbreviated New Drug Application seeking approval of a generic version of Differin® Gel, 0.3%, which was covered by the asserted patents. The district court determined, among other issues, that the Galderma patents were not invalid as obvious, and Tolmar appealed.
On appeal, the Federal Circuit ruled that the claims are invalid as obvious based upon prior art that disclosed a range of concentrations that encompassed the claimed range. The Federal Circuit held that if a claimed invention falls within a range disclosed in the prior art, then “the burden of production falls upon the patentee to come forward with evidence of” teaching away, new and unexpected results, or other pertinent secondary considerations of nonobviousness.
Addressing the patentee’s arguments of “teaching away,” the Federal Circuit held that the district court erred in determining that prior art disclosing an optimal concentration of 0.1% of adapalene, by weight, in a range from 0.01% to 1% adapalene by weight, taught away from the claimed invention of 0.3%. The prior art disclosed that 0.1% was optimal because increasing the concentration would increase side effects. The Federal Circuit explained that a reference does not teach away if it does not criticize, discredit, or otherwise discourage investigation into the claimed invention. The court stated that a teaching of an optimal, or standard, value does not “criticize, discredit, or otherwise discourage investigation into other compositions.”
Turning to new and unexpected results, the Federal Circuit held that while a tripling of the concentration did produce an unexpected result, the unexpected result “does not constitute an unexpected result that is probative of nonobviousness.” Distinguishing between types of unexpected results, the court explained that a result of a difference in kind is probative of nonobviousness while a result of a difference in degree is not probative. The Federal Circuit ruled that the small percentage increase in adapalene, which failed to produce some percentage increase in side effects, constituted a difference in degree of the side effects and is thus not probative of nonobviousness.
Turning to other pertinent secondary considerations, the Federal Circuit held that the district court erred in finding commercial success when there were quick gains in market share after expiration of a blocking patent that previously prohibited competition. The court explained that when market entry is precluded by blocking patents the “inference of non-obviousness . . . is weak.” The blocking patents expired in 2010, and therefore, the court held, the commercial success of Differin® Gel, 0.3%, is of “minimal probative value.”
In a dissenting opinion, Judge Newman stated that because the question of obviousness in this case was a close call that turns upon findings and interpretation of “biologic and medicinal evidence,” the findings of the “trial court warrant particular attention on appellate review.” Judge Newman stated that the majority “do[es] not identify clear error in the district court’s findings; instead they distort the burdens of proof and production” by “presum[ing] that the prior art establishes invalidity, and places on the patentee the burden of establishing patentability based on ‘secondary considerations.’”
Infringement: Contributory and Induced Infringement: Generally
Remedies: Exclusion Orders in § 337 Actions
Litigation Practice and Procedure: Jurisdiction: § 337 Actions in the ITC
Suprema, Inc., et al. v. International Trade Commission, et al., No. 12-1170 (Fed. Cir. (I.T.C.) Dec. 13, 2013). Opinion by O’Malley, joined by Prost. Opinion concurring in part and dissenting in part by Reyna.
The Federal Circuit held that an exclusion order from the International Trade Commission (“Commission”) may not be based upon induced infringement under 35 U.S.C. § 271(b) where direct infringement does not occur until after importation.
Cross Match Technologies, Inc. filed a complaint with the Commission asserting that the importation or sale of devices by Suprema, Inc. and Mentalix, Inc. infringed U.S. Patent Nos. 7,203,344 (“the ’344 patent”), 7,277,562 (“the ’562 patent”), and 5,900,993 (“the ’993 patent”). The patents claim biometrics and the scanning of biometric objects, with the most common being fingerprint scanning. The ’344 and ’562 patents are method patents, and the ’993 patent contains apparatus claims. Suprema is a Korean company that imports into the United States fingerprint scanners that come with a software development kit. Mentalix is one of Suprema’s customers that imports the scanners and then sells the scanners along with software to operate the scanners. The Commission issued a limited exclusion order based upon a finding that Mentalix directly infringed the ’344 patent, that Suprema induced infringement of the ’344 patent, and that Suprema directly infringed the ’993 patent.
On appeal, the Federal Circuit held “that an exclusion order based on a violation of § 337(a)(1)(B)(i) may not be predicated on a theory of induced infringement where no direct infringement occurs until post-importation.” The court explained that § 337(a)(1)(B)(i) ties the Commission’s authority to “articles that infringe a valid and enforceable U.S. patent” at the time of importation. The Federal Circuit noted that the Commission recognizes this limitation on its jurisdiction by refusing to investigate allegations of “direct infringement of method claims under § 271(a) because patented methods are not infringed until ‘use’ in the United States occurs.”
Turning to the timing of when induced infringement occurs, the Federal Circuit explained that to show induced infringement under § 271(b), there must first be a showing of direct infringement. While the conduct constituting induced infringement may occur before importation, the conduct is not “tied to an article” until direct infringement occurs. Prior to the conduct being “tied to an article” there are no articles that infringe a U.S. patent. Therefore, the Federal Circuit held that because of the limitation on the Commission’s jurisdiction concerning timing of infringement, the Commission cannot issue exclusion orders on imports that induce infringement but do not yet directly infringe. The Federal Circuit affirmed in part, vacated in part, and remanded in part the Commission’s exclusion order for the order to be revised to include articles infringing only at the time of importation.
In an opinion concurring in part and dissenting in part, Judge Reyna agreed with the majority except in negating the “the Commission’s statutory authority to stop induced infringement at the border.” Judge Reyna explained that the majority’s holding may harm U.S. patent holders by stopping importation of infringing articles because “once the unfairly traded article is imported, the harm is done.” Further, Judge Reyna explained that the majority’s opinion “allows importers to circumvent Section 337” by importing disassembled components of a patented machine or import an article that reserves final assembly for the end user in the United States.
Remedies: Damages: Attorneys’ Fees
CBT Flint Partners, LLC v. Return Path, Inc., et al., No. 13-1036 (Fed. Cir. (N.D. Ga.) Dec. 13, 2013). Opinion by Taranto, joined by Dyk. Concurring and dissenting opinion by O’Malley.
Affirming-in-part, reversing-in-part, and vacating-in-part the district court’s award of “costs of making copies,” the Federal Circuit held that the “cost of making copies” under 28 U.S.C. § 1920(4) includes costs necessary to duplicate an electronic document but not costs commonly incurred in preparing documents to be copied.
CBT Flint Partners, LLC (“CBT”), sued Return Path, Inc. and Cisco IronPort Systems, LLC (collectively “Cisco”) for infringement of U.S. Patent Nos. 6,192,114 (“the ’114 patent”) and 6,587,550 (“the ’550 patent”). CBT stipulated to noninfringement of the ’114 patent by Cisco, and the district court granted summary judgment of indefiniteness of the ’550 patent. Cisco then moved to recover its costs under 28 U.S.C. § 1920(4) for fees paid to an electronic discovery company. The district court granted Cisco’s motion to recover costs characterizing the fees as “the 21st Century equivalent of making copies.” On appeal of the summary judgment of indefiniteness, the Federal Circuit reversed the district court and remanded for further proceedings. With the remand, the Federal Circuit vacated the district court’s order on costs. On remand, the district court granted Cisco summary judgment of noninfringement, which the Federal Circuit summarily affirmed. In 2012, the district court entered an amended final judgment that Cisco was entitled to recover costs. Return Path submitted costs of $49,824.60 identifying no costs for making copies and $33,858.51 as “other.” Cisco IronPort Systems submitted costs for $268,311.12, identifying $4,473.10 as costs of making copies and $243,453.02 as “other.” The district court clerk taxed each party’s costs in the full amounts requested. The district court denied CBT’s motion to review taxation of costs. CBT appealed.
Affirming-in-part and reversing-in-part the district court’s award of costs, the Federal Circuit held that under § 1920(4) only the costs of creating the produced duplicates are recoverable. The Federal Circuit analyzed document production by breaking it down into three stages: collecting documents, organizing documents, and producing responsive documents. In the first stage of collecting documents, several steps are held to be “making copies,” including making a first copy of a document, converting files to a uniform format, and copying converted files to production media.
In the second stage of organizing documents, the Federal Circuit held that several steps associated with document review are not recoverable, such as project management, keyword searching, statistical previews, auditing and logging of files, ensuring compliance with Federal Rules, and extraction of proprietary data. However, the Federal Circuit held some tasks in electronic discovery call “for some common-sense judgments guided with the paper-document analogue” to determine if costs are recoverable, such as creation of a load file being analogous to a slip sheet and allowing for recovery. In the third stage of producing documents, the Federal Circuit held that the cost of copying responsive documents was recoverable under § 1920(4), but costs associated with “planning, preparation, coordination, and communications” are not recoverable.
Vacating-in-part the district court’s award of costs for “prior art searches,” the Federal Circuit held that “[n]othing in Section 1920 covers research costs.”
In an opinion concurring and dissenting, Judge O’Malley concurred that the “bulk of the costs” are not recoverable but dissented that the award of costs should be of “a single copy produced to the other party.” Also, Judge O’Malley stated that “the majority expands § 1920(4)” taxation of costs beyond a “clerical exercise” that the “clerk of the court generally could handle . . . without resort to judicial officers” to “create a complicated taxation process that requires judicial officers.”
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