Patent Case Summaries May 8, 2019

Patent Case Summaries | Week Ending May 3, 2019

A weekly summary of the precedential patent-related opinions issued by the Court of Appeals for the Federal Circuit and the opinions designated precedential or informative by the Patent Trial and Appeal Board.

Trading Technologies Int’l, Inc. v. IBG LLC, et al., No. 2017-2323 (Fed. Cir. (PTAB) Apr. 30, 2019). Opinion by Moore, joined by Clevenger and Wallach.

On appeal from final written decisions in two CBM proceedings, the Federal Circuit affirmed the Patent Trial and Appeal Board’s conclusions that the patent at issue is eligible for CBM review and that the claims are ineligible for patenting under 35 U.S.C. § 101.

At the outset, the Federal Circuit affirmed the Board’s determination that the patent is eligible for CBM review. In particular, the Federal Circuit agreed with the Board that the patent is not directed to a “technological invention” (which would make it ineligible for CBM review) because the claims “do not solve a technical problem using a technical solution.” Instead, the claims cover a graphical user interface that helps traders analyze market information, “which is a business problem, not a technical one.” As the court explained, “merely providing a trader with new or different information in an existing trading screen is not a technical solution to a technical problem. Instead, it focuses on improving the trader, not improving the functioning of the computer.”

Moving to the question of patent eligibility, the court applied the two-step framework adopted in Alice. At step one, the Federal Circuit emphasized that the focus of the claimed advance over the prior art was “providing a trader with additional financial information to facilitate market trades, an abstract idea.” The claims focus on providing information to traders “in a way that helps them process information more quickly, not on improving computers or technology.” The court ruled that information of this sort, “whether displayed in the form of price values or P&L values, is abstract.” At step two, the court saw “nothing in the combination of these elements that suppl[ies] an inventive concept.” The Federal Circuit concluded that “[t]he elements of the claims, considered individually and as an ordered combination, fail to recite an inventive concept.” Therefore, the claims were ineligible under § 101.

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ThermoLife Int’l LLC, et al. v. GNC Corp., et al., Nos. 2018-1657, -1666 (Fed. Cir. (S.D. Cal.) May 1, 2019). Opinion by Taranto, joined by Bryson and Stoll.

The Federal Circuit affirmed an award of attorneys’ fees under 35 U.S.C. § 285 due to the plaintiffs’ insufficient pre-suit investigation into infringement, despite that the litigation had ended based on the asserted claims being held invalid without ever reaching the issue of infringement. The Federal Circuit acknowledged that these appeals present “unusual cases in that the basis for the fee award had nothing to do with the only issues litigated to reach the judgment on the merits.”

After ruling the claims invalid, thus ending the case on the merits, the district court found that the plaintiffs had conducted an inadequate pre-filing investigation, resulting in objectively unreasonable infringement contentions. The court found that the plaintiffs either did not examine the accused products’ labels or, if they did, ignored clear label indications “of less than one gram of L-arginine (or its hydrochloride salt),” which would have demonstrated noninfringement. Moreover, the plaintiffs did not conduct, prior to filing suit, “simple tests” that would have demonstrated noninfringement.

On appeal, the Federal Circuit did not “see an abuse of discretion in the district court’s resting its exceptional-case determination on an examination of an issue—infringement, and specifically the basis for alleging infringement—that was neither fully adjudicated nor even fully litigated before the judgment on the merits.” The plaintiffs had a full opportunity to address the contentions raised in the fees motion and did not point to any denial of its procedural rights.

The Federal Circuit also refused to “den[y] a fee award, if one is otherwise justified, just because [the defendants] did not give early notice of the defects in plaintiffs’ infringement assertions that later became the basis for the fee award.” The court explained that the § 285 standard “is a flexible one,” and “we have not held that such notice is rigidly required.”

Finally, the Federal Circuit addressed portions of the district court’s opinion where the court relied on the plaintiffs having filed eighty-one infringement suits, including suits against the defendants here, and having settled many of them for “seemingly small” amounts, which the district court viewed as a “pattern of action” that supported the exceptional-case determination. The Federal Circuit generally agreed with the plaintiffs that such conduct would not, standing alone, show litigation abuses or a pattern of misconduct. But the Federal Circuit “nevertheless reject[ed] plaintiffs’ argument that the ‘pattern’ portion of the district court’s opinion infects the ultimate determination of exceptionality.” The district court’s opinion rested on a finding, accepted by the Federal Circuit, that “plaintiffs’ irresponsible filing of infringement allegations extended widely beyond the two cases before us.” Therefore, the district court did not abuse its discretion in finding the case exceptional under § 285.

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Endo Pharmaceuticals Inc., et al. v. Actavis LLC, et al., No. 2018-1054 (Fed. Cir. (D. Del.) May 3, 2019). Opinion by Wallach, joined by Clevenger. Dissenting opinion by Stoll.

The Federal Circuit affirmed the district court’s construction of “14-hydroxymorphinone” and the determination that the defendants had not proved the admittedly infringed claims to be obvious in light of the prior art.

The patent-in-suit is directed to an oxymorphone, a compound used for pain relief, with impurities of alpha- and beta- unsaturated ketone of less than 0.001%. During claim construction, the district court ruled that the term “14-hydroxymorphinone” means “14-hydroxymorphinone hydrochloride,” i.e., the “salt form” of 14-hydroxymorphinone. The Federal Circuit affirmed this construction based on intrinsic and extrinsic evidence. First, the construction is supported by the claim language itself, which the court ruled is directed to “14-hydroxymorphinone as part of the salt-, or hydrochloride-, form of the claimed compounds, and not as a separate non-salt, non-hydrochloride component.” Additionally, extrinsic evidence—specifically, testimony by one of the defendant’s experts—supported the construction.

Turning to the district court’s ruling that the claims were not proved invalid as obvious, the Federal Circuit affirmed, ruling that the district court did not clearly err in finding that a person of ordinary skill in the art would not have had a reasonable expectation of success in combining the prior art. The Federal Circuit also ruled that the district court did not clearly err in finding that certain confidential communications between the FDA and producers of oxymorphone did not provide a reasonable expectation of success in achieving the claimed purity levels for oxymorphone. The court explained that the communications “would not have been enough to overcome the disclosures of [the cited prior art], which indicate that a [person of ordinary skill] would not reasonably believe their disclosed methods were fruitful avenues to achieve the FDA-mandated oxymorphone purity level.”

In a dissenting opinion, Judge Stoll addressed three areas where the district court erred. First, in her view, the court improperly discounted the import of the FDA communications. Second, the court “erred by imposing a requirement that a reference must teach how to solve a problem to provide a motivation to combine, conflating enablement and reasonable expectation of success requirements with motivation.” And third, the court “applied an erroneously heightened standard for a reasonable expectation of success by requiring a ‘definitive solution’ and proof of actual success.”

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