Patent Case Summaries March 28, 2014

Federal Circuit Patent Case Summaries for the Week Ending March 28, 2014

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 March 28, 2014. David Kuklewicz and Kirk Bradley prepared this edition. 

Case Summaries

Defenses: Generally
Litigation Practice and Procedure: Procedure: Summary Judgment: Sufficiency of Evidence
Litigation Practice and Procedure: Prior Adjudication: Claim Preclusion (Res Judicata)

Brain Life, LLC v. Elekta Inc. , No. 13-1239 (Fed. Cir. (S.D. Cal.) Mar. 24, 2014). Opinion by O’Malley, joined by Bryson and Wallach.

In affirming-in-part the district court’s grant of summary judgment barring patent infringement claims, the Federal Circuit held that the Kessler Doctrine continues to preclude claims not otherwise barred by claim or issue preclusion where those claims are essentially the same as claims already asserted against previous versions of the same accused products.

In December 1997, Medical Instrumentation Diagnostics Corporation (“MIDCO”) filed suit against Elekta, Inc. (“Elekta”) in the U.S. District Court for the Southern District of California, alleging infringement of U.S. Patent No. 5,398,684 (“the ’684 patent”). The patent relates to a method and apparatus for generating video images from scanner image sources. Before trial, the district court granted a motion to dismiss the method claims without prejudice. The jury found that Elekta’s products infringed, awarding $16 million in damages.

During an earlier appeal, the Federal Circuit reversed the finding of infringement, vacated the damages award, and remanded for the district court to enter a noninfringement judgment as a matter of law. On remand, MIDCO attempted to assert the method claims. Refusing to reopen the case, the district court entered a final judgment finding no infringement.

In September 2009, Brain Life, LLC (“Brain Life”) became a licensee of the ’684 patent. Subsequently, Brain Life asserted the method claims against four Elekta products. Elekta moved to dismiss Brain Life’s complaint based on res judicata, arguing that the accused products were essentially the same as the products from the previous MIDCO suit where the patent’s system claims were asserted. The district court granted summary judgment in favor of Elekta, noting that allowing assertion of the method claims in the new action would result in impermissible claim splitting.

On appeal, Brain Life argued that claim preclusion was inapplicable because the asserted claim limitations differed from the asserted claims in the MIDCO suit. Brain Life further argued that the method claims were not subject to res judicata because those claims were dismissed without prejudice in the MIDCO suit. Finally, Brain Life argued that claim preclusion could not apply to the one accused product that came into existence after final judgment in the MIDCO suit.

The Federal Circuit held that claim preclusion did not apply to the extent that the infringement allegations were limited to acts or omissions occurring after the final judgment in the original MIDCO action. Further, the Federal Circuit held that issue preclusion did not apply because the method claims were not fully and fairly litigated in the MIDCO suit, and because one of Elekta’s products was never at issue in that action. However, the Federal Circuit held that the Kessler Doctrine applied.

The Federal Circuit explained that the Kessler Doctrine, enunciated in Kessler v. Eldred, 2016 U.S. 285 (1907), fills the gap where other preclusion doctrines may not apply by “allowing an adjudged non-infringer to avoid repeated harassment for continuing its business as usual post-final judgment in a patent action where circumstances justify that result.” Applying the Kessler Doctrine, the Federal Circuit held that because all of the asserted claims were or could have been asserted in the original MIDCO suit, “the accused devices acquired a status as noninfringing devices, and Brain Life is barred from asserting that they infringe the same patent claims a second time.”

Accordingly, the Federal Circuit affirmed the district court’s judgment, ruling that preclusion barred Brain Life’s claims against three of Elekta’s accused products. However, the Federal Circuit vacated and remanded the district court’s judgment with respect to one accused product, holding that preclusion doctrines did not apply to bar claims brought against an Elekta product that was not at issue in the MIDCO suit.  

Inventors and Inventorship: Generally
Litigation Practice and Procedure: Courts: Generally
Litigation Practice and Procedure: Jurisdiction: Generally

StoneEagle Services, Inc. v. Gillman, et al. , No. 13-1248 (Fed. Cir. (N.D. Tex.) Mar. 26, 2014). Opinion by Rader, joined by Moore and Reyna.

Vacating and remanding a district court’s preliminary injunction, the Federal Circuit held that the district court lacked jurisdiction over a declaratory judgment claim where the Plaintiff-Appellee failed to allege an actual controversy related to the inventorship of a patent.

StoneEagle Services, Inc. (“StoneEagle”) sued David Gillman (“Gillman”) and Talon Technologies, Inc. (collectively “Appellants”), seeking a declaratory judgment that Robert Allen was the sole inventor of U.S. Patent No. 7,792,686 (“the ’686 patent”), which relates to an electronic payment system for health care claims. In addition, StoneEagle asserted state law trade secret misappropriation claims and requested a preliminary injunction. Less than a month later, the district court issued a preliminary injunction barring Appellants from disclosing StoneEagle’s trade secrets. Afterward, the district court issued orders attempting to clarify the preliminary injunction and enjoining Appellants from using materials and processes developed by StoneEagle in connection with health care payment systems.

On appeal, the Federal Circuit ruled that “[w]hether an actual controversy exists that is sufficient to confer jurisdiction under the Declaratory Judgment Act is a question of law that this court review de novo.” The Federal Circuit further ruled that the federal courts’ jurisdiction is limited to cases meeting the requirements of Article III of the Constitution.

The Federal Circuit noted that StoneEagle’s declaratory judgment claim potentially involves both ownership and inventorship issues, but that ownership issues involve state law. Thus, the Federal Circuit determined that whether federal jurisdiction is appropriate would hinge on whether StoneEagle’s complaint alleged a sufficient controversy regarding inventorship of the ’686 patent.

Reviewing StoneEagle’s allegations as if they were true, the Federal Circuit held that the complaint did not allege a controversy related to inventorship sufficient for federal jurisdiction. Specifically, the Federal Circuit reasoned that the complaint’s allegations that Gillman “suddenly and falsely claimed that [the ’686 patent] is his patent, that he wrote the patent, that it is on his computer, and that he ‘authored’ or ‘wrote’ it, or words to that effect” were insufficient to find a controversy related to inventorship. The Federal Circuit held that, at best, the complaint’s allegations demonstrate that a dispute regarding patent ownership may exist, but that is insufficient for federal jurisdiction.

Holding that StoneEagle failed to allege an actual controversy to support federal jurisdiction, the Federal Circuit vacated the proceedings of the district court, including the preliminary injunction, and remanded the case to the district court with instructions to dismiss.  

Claim Interpretation: Intrinsic Evidence: Specification
Claim Interpretation: Intrinsic Evidence: Importing Limitations from the Specification into Claims
Claim Interpretation: Intrinsic Evidence: Prosecution Disclaimer
Infringement: Hatch-Waxman Act

Shire Development, LLC, et al. v. Watson Pharmaceuticals, Inc., et al. , No. 13-1409 (Fed. Cir. (S.D. Fla.) Mar. 28, 2014). Opinion by Hughes, joined by Rader and Prost.

Reversing and remanding the district court’s claim constructions, the Federal Circuit held that even where there is not prosecution disclaimer because statements do not rise to the level of “unambiguous disavowals,” statements in the prosecution history nevertheless inform claim construction.

Shire Development, LLC (“Shire”) filed suit against Watson Pharmaceuticals, Inc. (“Watson”) in the U.S. District Court for the Southern District of Florida, alleging infringement of U.S. Patent No. 6,773,720 (“the ’720 patent”), which relates to a controlled-release oral pharmaceutical composition for treating inflammatory bowel diseases. Shire initiated its suit following Watson’s submission of its Abbreviated New Drug Application seeking FDA approval for the bioequivalent of LIALDA®.

Independent Claim 1 of the ’720 patent describes controlled-release oral pharmaceutical compositions comprising, in part, “an inner lipophilic matrix” and “an outer hydrophilic matrix.” During prosecution of the ’720 patent, the applicants distinguished prior art cited by the examiner in office action rejections by arguing that the prior art fails to “disclose or suggest two matrices and the arrangement of the matrices as set forth in the claimed invention.” Further, the applicants argued that prior art “do[es] not teach an inner lipophilic matrix or an outer hydrophilic matrix.”

Construing the disputed claim terms, the district court determined that “inner lipophilic matrix” means “a matrix including at least one lipophilic excipient, where the matrix is located within one or more substances,” and the term “outer hydrophilic matrix” means “a matrix of at least one hydrophilic excipient, where the matrix is located outside the inner lipophilic matrix.” Following a bench trial, the district court found that Watson infringed Claims 1 and 3 of the ’720 patent. Watson appealed issues of claim construction, infringement, and invalidity.

Reviewing the district court’s claim construction de novo, the Federal Circuit held that the court’s constructions for the “inner lipophilic matrix” and “outer hydrophilic matrix” terms were overly broad based on the intrinsic evidence. The Federal Circuit ruled that the claim itself requires inner lipophilic matrix to be separate from the outer hydrophilic matrix based on the manner in which the terms are separated in elements (a) and (b) of Claim 1. Further, the Federal Circuit reasoned that Shire admitted that the claim language calls for separate matrices during oral arguments, that a logical reading of the claim requires separation between the matrices, and that the patent’s specification itself teaches separate matrices. The Federal Circuit also noted that the district court’s constructions for the terms were erroneous because they could result in an arbitrarily selected volume that simultaneously meets the definition for both an “inner lipophilic matrix” and an “outer hydrophilic matrix,” which is counter to the claim language that requires separate matrices with a defined spatial relationship.

Finally, the Federal Circuit ruled that while the district court correctly found there was no “unmistakable disavowal” related to “separate” matrices, the prosecution history nevertheless informs claim construction and describes an invention that requires that the inner lipophilic matrix is separate from the outer hydrophilic matrix.

Accordingly, the Federal Circuit reversed and remanded the district court’s constructions for the terms “inner lipophilic matrix” and “outer hydrophilic matrix,” as well as the district court’s subsequent infringement determination.  


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