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 February 13, 2015. Mike Turner and Kirk Bradley prepared this edition.
Case Summaries
Infringement: Literal infringement
Defenses: Miscellaneous Defenses
Relationship to Other Intellectual Property: Copyrights
Helferich Patent Licensing, LLC v. The New York Times Co., et al., Nos. 14-1196, -1197, -1198, -1199, -1200 (Fed. Cir. (N.D. Ill.) Feb. 10, 2015). Opinion by Taranto, joined by Bryson and Chen.
The Federal Circuit reversed the grants of summary judgment by the district court in each of the cases leading to the consolidated appeal, holding that patent exhaustion did not apply to the claims brought by patentee Helferich Patent Licensing, LLC (“Helferich”). In so holding, the Federal Circuit considered whether a prior license between the patentee and non-defendant handset makers exhausted the rights of the patentee with regard to asserted claims, and held that it did not.
Helferich had brought suits in the district court against a variety of media and retail companies for infringement of seven patents related to systems and methods of handling information and providing information to wireless devices, such as mobile phone handsets. Only two of the asserted patents included claims that addressed features of the handsets directly. Prior to the suits, Helferich had entered into a license over the asserted patents with, effectively, every handset manufacturer in the United States. The defendants, not handset makers themselves but rather providers of content to handsets, moved for summary judgment that this license exhausted Helferich’s ability to enforce the patents, not only against the acquirers of handsets from the handset makers, but also against the defendant content providers who manage content and deliver it to handset users.
The district court agreed, finding that because Helferich had authorized “every” mobile phone manufacturer to sell handsets, its rights were exhausted against handset acquirers and also third parties interacting with the handsets. In reaching this decision, the district court relied on the determination that “all of the patents-at-issue require the use of a handset” and that handsets “sufficiently embody the patents-in-suit.” Summary judgment was granted for defendants on this ground, and Helferich appealed.
The Federal Circuit began by noting that all of the asserted patents arose out of a common specification and resulted in claims directed to features and methods of handsets (the “handset claims”) as well as claims directed to systems and methods of storing, managing, and delivering content to those handsets (the “content claims”). Five of the seven asserted patents contained only content claims, and only these content claims had been asserted against the defendants.
After establishing that the content claims were presumptively valid, and thus sufficiently patentably distinct from the handset claims, the Federal Circuit turned to the license Helferich had entered into with handset manufacturers. The court held that the license was expressly limited in field of scope to mobile wireless communications devices (i.e., handsets), noted that third-party providers of content to handsets were not included in that field, and reserved enforcement rights against the content providers. The court also noted that the defendants had relied only on patent exhaustion and not on any kind of implied license, which could be found in the handset manufacturer licenses.
The court then evaluated the lower court’s reasoning de novo and held that it (i) relied on one patent’s Abstract to establish the scope of the asserted claims, (ii) did not state that the defendants were using handsets, (iii) did not state that handset possessors practiced any of the asserted claims or put them into service thereby “using” them, and (iv) did not state that the asserted content claims required a handset that embodied the licensed handset claims. As further evidence of this, the defendants had presented the issue on appeal as “whether the district court correctly held the Helferich’s infringement claims are barred due to patent exhaustion because they necessarily involve the use of already-licensed handsets.” The Federal Circuit held that the lower court’s reasoning was flawed as was the defendants’ use of “necessarily involve,” because the term implied something that an accused infringer must do, and the content-providing defendants were never accused of controlling or using the handsets at all. In support, the court reiterated that the defendants did not contend that handset possessors practice any of the asserted claims nor did they contend that the content claims require, or call on, a handset that has the inventive features of the handset claims.
Thus, the Federal Circuit held that the exhaustion defense, as framed by the defendants, did not bar Helferich’s claims, and the Federal Circuit was not inclined to extend the judicially-created doctrine to do so. The fact that one invention (the content claims) enhanced the utility of or tended to make more useful a second invention (the handset claims) did not mean that a license to the second invention applied to the first. Simply put, the exhaustion doctrine’s lifting of patent law restrictions on a licensed product had never been applied to terminate patent rights in such complementary activities or goods in these circumstances. The court analogized the situation to that of the third-party standing doctrine, where one person may be adversely affected by legal constraints on another and yet not have a legal right to seek elimination of those constraints. With that, the Federal Circuit reversed the judgment of the lower court.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/14-1196.Opinion.2-6-2015.1.PDF
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Litigation Practice and Procedure: Prior Adjudication: Issue Preclusion (Collateral Estoppel)
United Access Technologies, LLC v. CenturyTel Broadband Services LLC, et al., No. 14-1347 (Fed. Cir. (D. Del.) Feb. 12, 2015). Opinion by Bryson, joined by Newman and O’Malley.
The Federal Circuit reversed the lower court’s decision to dismiss the patent holder’s action on collateral estoppel grounds. In so ruling, the Federal Circuit held that an earlier litigation’s judgment as a matter of law (“JMOL”) simply reflected that a rational jury could reasonably have found noninfringement based on either of two theories, and not that they actually did, as would have been necessary for the lower court to dismiss a later action on collateral estoppel grounds.
United Access Technologies, LLC (“United”) is the owner of the asserted patents, which involve systems for using a landline telephone connection for both voice communication and data transmission. United’s predecessor in interest, Inline Connection Corp. (“Inline”), previously had brought suit against EarthLink, Inc. (“Earthlink”) for direct infringement of the same patents at issue in the present appeal. In the earlier case, EarthLink had presented two defenses: first, its ADSL technology did not infringe; and second, its ADSL technology did not include a “telephone device” as was required by the claims.
The jury in the EarthLink case returned a general verdict of noninfringement, with no indication in the verdict form or the other aspects of the record on what ground the jury had adopted for its decision. Inline moved for JMOL, which the trial court denied after finding that the jury’s verdict could be upheld under either of EarthLink’s noninfringement theories.
Nine years later, United brought the instant action, asserting the same patent claims against the same ADSL technology. The defendants sought dismissal of United’s claims based on collateral estoppel from the EarthLink case, in that that jury had established as a matter of law that ADSL did not infringe the patents. The lower court agreed with the defendants and dismissed the action, based in part on a perceived failure of United to show how the defendants’ systems were different from those in the EarthLink case. In so ruling, the lower court applied the Third Circuit law that “independently sufficient alternative findings are given preclusive effect.”
United appealed the collateral estoppel determination. United argued that the lower court misapplied Third Circuit law, as the JMOL order in the EarthLink case established only that the jury could have permissibly reached its verdict on either of the alternative noninfringement theories, and not that it necessarily did so. The Federal Circuit agreed, stating that the law of collateral estoppel requires, inter alia, that “the issue was actually decided in a decision that was final, valid, and on the merits.” The court held that the issue of whether ADSL infringes the asserted claims of United’s patents was not actually decided in the EarthLink case because of the general jury verdict.
The Federal Circuit did note, however, that general jury verdicts can give rise to collateral estoppel if it is clear that the jury necessarily decided a particular issue in the course of reaching its verdict. But when there are several possible grounds, as evidenced by the lower court’s JMOL decision, and the record does not make clear which was relied on, collateral estoppel does not attach. The Federal Circuit thus reversed and remanded the case for further proceedings.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/14-1347.Opinion.2-10-2015.1.PDF
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Litigation Practice and Procedure: Prior Adjudication: Issue Preclusion (Collateral Estoppel)
Litigation Practice and Procedure: Procedure: JMOL Procedure
Soverain Software LLC v. Victoria’s Secret Direct Brand Management, LLC, et al., Nos. 12-1649, -1650 (Fed. Cir. (E.D. Tex.) Feb. 12, 2015). Opinion by Dyk, joined by Taranto and Hughes.
The Federal Circuit reversed the lower court’s finding of infringement, holding that issue preclusion rendered the asserted claims invalid by way of a previous appeal involving the same patents.
Soverain Software LLC (“Soverain”) is the assignee of U.S. Patent Nos. 5,715,314 (“the ’314 patent”) and 5,909,492 (“the ’492 patent”) related to virtual shopping carts and purchase order statements. Soverain brought an infringement suit against Victoria’s Secret Direct Brand Management, LLC and Avon Products, Inc. After a trial, a jury determined that Claims 34 and 51 of the ’314 patent and Claims 15, 17, and 39 of the ’492 patent were infringed and not invalid. The defendants appealed.
Shortly after filing the present appeal, the Federal Circuit decided an appeal in another case involving a parallel patent infringement suit brought by Soverain against Newegg Inc. involving the same patents. In that case, the lower court likewise had held the claims infringed and not invalid, but on appeal, the Federal Circuit reversed, holding invalid as obvious Claims 34, 35, and 51 of the ’314 patent, and Claims 17, 41, and 61 of the ’492 patent.
The Federal Circuit then considered whether the law of issue preclusion applied to the invalidity of the now asserted claims. The court noted that the law of the regional circuit is applied to the general question of whether issue preclusion applies, but Federal Circuit precedent is applied to substantive issues of patent law as well as issues of issue preclusion that implicate substantive patent law. Here, the law of the Fifth Circuit was found to be similar to that of the Federal Circuit, requiring four conditions for issue preclusion: identity of the issues in a prior proceeding; those issues were actually litigated; the determination of the issues was necessary to the resulting judgment; and the party defending against preclusion had a full and fair opportunity to litigate the issues.
In the Newegg appeal, the Federal Circuit explicitly held that Claims 34 and 51 of the ’314 patent and Claim 17 of the ’492 patent were invalid. Although Claim 15 was not at issue there, Claim 41, which was invalidated, depends from Claim 15, and thus the broader claim was invalid as well. The court reiterated the rule that once claims of a patent are held invalid in a suit involving one alleged infringer, an unrelated party who is sued for infringement on those claims may reap the benefit of the invalidity decision under principles of collateral estoppel.
In the present appeal, Soverain argued that issue preclusion should not apply because it did not have a full and fair opportunity to litigate the issue of obviousness in the Newegg appeal. By way of background, in the Newegg matter, the parties had cross-moved for judgment as a matter of law (“JMOL”) regarding obviousness and nonobviousness. Newegg also moved for a new trial. The district court granted Soverain’s motion and denied both of Newegg’s. Newegg appealed the grant of Soverain’s nonobviousness motion and the denial of its own motion for a new trial, but notably did not appeal the denial of its obviousness motion. Soverain thus argued in the present appeal that the Federal Circuit had stepped beyond its bounds when it ordered JMOL of obviousness, as Newegg had effectively only asked for a new trial. The Federal Circuit disagreed, and held the asserted claims invalid.
Based on these circumstances, Soverain argued that it did not have the incentive to fully litigate the issue of nonobviousness in that prior Newegg appeal, so collateral estoppel should not apply in the present case. Specifically, Soverain contended that it would have raised different or additional arguments if it had known that the Federal Circuit might reverse the district court on invalidity rather than only granting a new trial. Soverain offered several examples of claim limitations that it said were not present in the prior art and not presented in the Newegg appeal. The court, however, was not persuaded. It first held that Soverain failed to provide a case in support of the notion that the possibility of raising different arguments means a full and fair opportunity to litigate was lacking. It then held that most of Soverain’s examples had indeed been raised and decided.
The only remaining question for the court was whether claim preclusion applied to Claim 39 of the ’492 patent, which was not at issue in the Newegg appeal. Soverain argued that issue preclusion should not apply because the claim does not involve issues identical to the other, now invalid, claims. The Federal Circuit noted that complete identity of claims is not required to satisfy the identity-of-issues requirement for claim preclusion. The court then held that the only difference between dependent Claim 39 and its independent (and invalid) Claim 15 concerned a routine incorporation of internet technology which did not materially alter the question of validity. Thus, the Federal Circuit determined that the involved patent claims were established by issue preclusion to be invalid. Thus, the court reversed the district court’s finding of infringement and no invalidity.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/12-1649.Opinion.2-10-2015.1.PDF
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Claim Interpretation: Intrinsic Evidence: Importing Limitations from the Specification into Claims
Claim Interpretation: Intrinsic Evidence: Prosecution Disclaimer
Claim Interpretation: Claim Differentiation
Fenner Investments, Ltd. v. Cellco Partnership (d.b.a. Verizon Wireless), No. 13-1640 (Fed. Cir. (E.D. Tex.) Feb. 12, 2015). Opinion by Newman, joined by Schall and Hughes.
The Federal Circuit affirmed the lower court’s finding of noninfringement by defendant Cellco Partnership. The Federal Circuit held that the lower court’s construction of the claim term “personal identification number” was correct, and under the construction, the parties had stipulated to noninfringement.
Fenner Investments (“Fenner”) owns the asserted patent concerned with personal communication services (“PCS”) systems. A principle of the patent is the need for “locating and tracking personal identification numbers” such that billing and connecting procedures are based or linked back to individual users rather than physical telephonic devices. Among other terms, the asserted claims required the use of a “personal identification number” and a “billing code,” which the district court construed, respectively, to mean “a number separate from a billing code (as construed herein), identifying an individual system user, which is associated with the individual and not the device” and “a code separate from the personal identification number (as construed herein) identifying a particular billing authority (as construed herein).” Based on these constructions, the parties stipulated to noninfringement, subject to Fenner’s right to appeal.
Applying the standards recently set forth in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831 (2015), the Federal Circuit began by noting that it conducts a de novo review of the ultimate question of claim construction and relevant intrinsic evidence, and that extrinsic evidence is reviewed for clear error. The primary issue on appeal was the lower court’s construction of “personal identification number” as a number that is associated with a user and not a particular device. Fenner argued that the lower court improperly read this limitation from the specification into the term.
The court held that the asserted patent specification supported the lower court’s construction. Specifically, the specification described how the PCS system was user-centered, stated that “[t]he personal identification numbers 2 are not associated with any particular communications unit or physical location but are associated with individual users,” and explained how the invention is distinguished from non-PCS systems whose billing and system management procedures are associated with the telephone device and not the individual making the calls. The patent also described other features, such as a “fraud protection unit,” created to overcome difficulties with the user-associated aspect of the personal identification number.
The court also held that the prosecution history supported the lower court’s construction. There, the application was rejected in light of a reference that taught a “mobile identification number” sent from a mobile telephone to base stations. Fenner overcame the rejection by stressing that the prior art was a device-centered system in contrast to Fenner’s user-centered design. In rebuttal, Fenner argued that these statements and the limitations discussed were not the basis for the grant of the patent. However, the Federal Circuit had its own counter, stating that the public has a right to rely on the inventor’s statements made during prosecution, without attempting to decipher whether the examiner relied on them or how much weight they were given.
Fenner then argued that, despite the intrinsic evidence, the lower court’s construction could not be correct because it would render the patented invention inoperable. The court disagreed, holding that the lower court’s construction requires only that a personal identification number be not permanently associated with a specific communications unit or location.
Fenner’s final argument was that the lower court’s construction was incorrect based on claim differentiation. Specifically, the lower court’s construction would render a dependent claim redundant. The court disagreed here as well, stating that while claim differentiation is a useful analytic tool, it cannot enlarge the meaning of a claim beyond that which is supported by the patent documents, or relieve any claim of limitations imposed by the prosecution history.
Applying these rulings, the Federal Circuit affirmed the district court’s claim construction and award of summary judgment of noninfringement.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/13-1640.Opinion.2-10-2015.1.PDF
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