Patent Case Summaries July 17, 2019

Patent Case Summaries | Week Ending July 12, 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.

Focal Therapeutics, Inc. v. SenoRx, Inc., No. IPR2014-00116 (July 21, 2014) (designated precedential on July 10, 2019). Opinion by Bonilla, joined by Green and Prats.

The Patent Trial and Appeal Board clarified when cross-examination of a witness “has concluded” under the Testimony Guidelines of the Office Patent Trial Practice Guide, which provides:

Once the cross-examination of a witness has commenced, and until cross-examination of the witness has concluded, counsel offering the witness on direct examination shall not: (a) consult or confer with the witness regarding the substance of the witness’ testimony already given, or anticipated to be given, except for the purpose of conferring on whether to assert a privilege against testifying or on how to comply with a Board order; or (b) suggest to the witness the manner in which any questions should be answered.

The Patent Owner sought guidance from the Board as to whether these restrictions “apply only to the initial cross-examination of the witness, or apply to the entire deposition, which can of course include redirect as well as subsequent re-cross of the witness.” The Board explained that cross-examination “refers to either cross-examination or re-cross, but does not refer to the entire time frame between when cross-examination commences, and until re-cross examination concludes.” Thus, “[t]he prohibition of conferring with the witness ends once cross-examination concludes, and, if relevant, begins again when re-cross commences, and continues until re-cross concludes. The prohibition does not exist, however, during the time frame between conclusion of cross-examination and the start of re-cross.” The Board also noted that parties “may agree in advance of the deposition that counsel may not confer with a witness until after the deposition is over.”

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General Electric Co. v. United Technologies Corp., No. 2017-2497 (Fed. Cir. (PTAB) July 10, 2019). Opinion by Reyna, joined by Taranto. Concurring opinion by Hughes.

The Federal Circuit held that GE lacked Article III standing to appeal the Patent Trial and Appeal Board’s Final Written Decision and dismissed the appeal.

The Board found that the claims of the challenged patent were not obvious in view of the prior art, and GE appealed. UTC moved to dismiss the appeal for lack of standing, asserting that GE failed to demonstrate a sufficient injury in fact. The Federal Circuit requested additional briefing from the parties, as well as a supplemental declaration from GE’s chief IP counsel. GE proffered three theories of harm to support standing: (1) competitive harm; (2) economic losses; and (3) estoppel under 35 U.S.C. § 315(e). The Federal Circuit rejected each of GE’s arguments.

Regarding GE’s assertion of competitive harm, the Federal Circuit determined that GE’s asserted competitive injuries were speculative and not tied to the challenged patent. The court held that “[w]ithout a real, particularized injury, GE lacks standing to appeal the IPR decision.”

Turning to GE’s economic loss argument, the Federal Circuit held that GE’s broad claim of research and development expenditures spent in efforts to design around the challenged patent was insufficient. GE failed to provide any evidence that the efforts succeeded or were prompted by the challenged patent. 

Finally, the Federal Circuit rejected GE’s argument that estoppel under 35 U.S.C. § 315(e) creates an injury in fact. The court held that where “the appellant does not currently practice the patent claims and the injury is speculative . . . the estoppel provision does not amount to an injury in fact.” The Federal Circuit thus held that GE lacked Article III standing and dismissed the appeal.

Judge Hughes wrote a separate opinion concurring only in the judgment. He observed that the court’s binding precedent requires the losing party in an IPR “to show concrete current or future plans to infringe the challenged patent.” Bound by that precedent, Judge Hughes concurred in the judgment. In his view, though, the court’s precedent is “overly rigid and narrow.” Judge Hughes explained: “I do not believe that Article III requires such a showing, particularly where Congress has provided IPR petitioners a procedural right of appeal.”

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TQ Delta, LLC v. Dish Network LLC, No. 2018-1799 (Fed. Cir. (PTAB) July 10, 2019). Opinion by Wallach, joined by Newman and Linn.

The Federal Circuit affirmed the Patent Trial and Appeal Board’s determination in an IPR that certain claims were unpatentable as obvious.

In a Final Written Decision, the Board interpreted the claim term “without needing to reinitialize” as being satisfied “if any step of initialization is avoided.” On appeal, the Patent Owner challenged this ruling as inconsistent with the APA because the construction differed from the Board’s initial construction (in the Decision to Institute) and “because neither party advocated for a new claim construction,” thus denying the Patent Owner “a proper chance to respond.”

The Federal Circuit affirmed the construction, ruling that the Board did not violate the APA. The court stated: “In the Final Written Decision, the [Board] explained what its understanding of the limitation was in the context of the prior art.” The Federal circuit also ruled that the Board had not changed the construction in the Final Written Decision because the Board had not construed the limitation in the Decision to Institute. Further, the Patent Owner “had notice of the claim construction issue and the opportunity to be heard” over the course of the IPR proceedings.

The Patent Owner also appealed the Board’s decision that the challenged claims were obvious over a combination of three prior art references. The Patent Owner argued that one reference failed to disclose all claim limitations and that another reference taught away from the claims, rendering the combination of references inoperable. The Federal Circuit affirmed the Board’s determination of obviousness, ruling that substantial evidence supported the obviousness determination.

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Cisco Systems, Inc. v. TQ Delta, LLC, Nos. 2018-1806, -1917 (Fed. Cir. (PTAB) July 10, 2019). Opinion by Wallach, joined by Newman and Linn.

This case is a companion to the TQ Delta, LLC v. Dish Network LLC opinion (summarized above). In this appeal, the Federal Circuit vacated the Patent Trial and Appeal Board’s construction of the claim term “synchronization signal” and remanded for the Board to reconsider unpatentability.

In a Final Written Decision, the Board construed the claim term “synchronization signal” to mean “a signal allowing synchronization between the clock of the transmitter of the signal and the clock of the receiver of the signal,” which “excludes a synchronization frame.” The Petitioners argued that the PTAB improperly limited the term and thus did not apply the “broadest reasonable construction” standard.

The Federal Circuit agreed and vacated the Board’s construction. The court ruled that the claims and specification “teach that ‘synchronization signal’ means ‘a signal allowing frame synchronization between the transmitter of the signal and the receiver of the signal,’ and is not limited to describing what the signal must synchronize or to a particular type of synchronization.” The court explained that “without any clear indication otherwise in the specification, synchronization is not restricted to the ‘advantageous’ clock-based preferred embodiment as described in the specification.” The Federal Circuit thus determined that the broadest reasonable interpretation “is simply ‘used to establish or maintain a timing relationship between transceivers between the transmitter of the signal and the receiver of the signal,’ meaning synchronization signal includes frame synchronization.” The Federal Circuit remanded for the Board to consider unpatentability under the proper claim construction.

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Quake, et al. v. Lo, et al., Nos. 2018-1779, -1780, -1782 (Fed. Cir. (PTAB) July 10, 2019). Opinion by Chen, joined by Reyna and Hughes.

The Federal Circuit affirmed the Patent Trial and Appeal Board’s ruling that certain claims are unpatentable for lack of written description under 35 U.S.C. § 112.

The appeal stemmed from three interference proceedings to determine who first invented certain methods of genetic testing for fetal abnormalities. The claims at issue recite a random massively parallel sequencing (MPS) method, “meaning that all of the DNA in the sample is sequenced, as opposed to sequencing specific, targeted sequences.” The specification, by comparison, “only expressly describes detection of target sequences.” The Board determined that the random MPS claims are invalid for lack of written description. The Board also decided not to admit expert testimony from another proceeding.

On appeal, the Federal Circuit held that “[i]n this fact-specific case, substantial evidence supports the Board’s findings on lack of adequate written description.” The court determined that the claimed method “as a whole is not expressly described” in the specification, and “‘random MPS’ is never mentioned.” “Here, the first time that Quake tried to cover random MPS with this specification was after the publication of Lo’s patent application directed to random MPS: Quake then canceled all his pending claims and replaced them with claims covering random MPS, creating a mismatch between the claims and the originally filed specification.”

The Federal Circuit also found no abuse of discretion in the Board’s decision not to admit certain expert testimony from a terminated district court proceeding. Quake argued that Lo’s expert made key admissions regarding the adequacy of the written description. The Federal Circuit addressed the testimony and the Board’s reasoning for excluding it, and the court ultimately determined that the Board acted within its discretion in not admitting the testimony.

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Samsung Electronics Co. v. Infobridge Pte. Ltd., Nos. 2018-2007, -2012 (Fed. Cir. (PTAB) July 12, 2019). Opinion by O’Malley, joined by Newman and Schall.

In two IPRs, the Patent Trial and Appeal Board upheld all challenged claims of a patent owned by Infobridge. The Board found that Samsung failed to show that a prior art reference—Working Draft 4 (WD4) of the High Efficiency Video Coding (H.265) standard—was publicly accessible before the patent’s critical date and thus it could not be considered prior art. Samsung appealed the Board’s decisions, arguing that it has standing to appeal and that the Board applied the wrong legal standard in assessing public accessibility.

On appeal, the Federal Circuit first considered Samsung’s standing, which “turns on its relationship to Infobridge and the ’772 patent.” The patent is licensed as part of a “pool” of patents (including some owned by Samsung) that have been declared essential to the H.265 standard. Licensees pay a fixed royalty for the pooled patents. If a patent is declared invalid, it is removed from the pool, meaning that members of the pool (including Samsung) “stand to gain if another pool patent is invalidated and removed from the pool.” The Federal Circuit ruled that, “under the facts and circumstances of this case, [Samsung’s] injury confers Article III standing.”

Next, the Federal Circuit turned to the merits of the appeal, which turned on “public accessibility” of the WD4 reference. Samsung argued that the reference was publicly accessible because it was discussed at meetings of the Joint Collaborative Team on Video Coding (JCT-VC), uploaded to associated websites, and emailed to the JCT-VC listserv. The Board rejected all three reasons. The Federal Circuit agreed with the Board as to the first two reasons but not the third reason where “the Board erred by confusing access with accessibility.” The Federal Circuit explained: “Our cases have consistently held that the standard for public accessibility is whether a person of ordinary skill in the art could, after exercising reasonable diligence, access a reference.” A party “need not establish that specific persons actually accessed or received a work to show that the work was publicly accessible.” “The Board departed from this well-established principle by repeatedly faulting Samsung for not proving that the WD4 reference was ‘generally’ or ‘widely’ disseminated.” The Federal Circuit thus vacated the Board’s finding and remanded so that the Board can consider the issue after applying the correct legal standard.

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SRI International, Inc. v. Cisco Systems, Inc., No. 2017-2233 (Fed. Cir. (D. Del.) Mar. 20, 2019, modified on July 12, 2019). Opinion by Stoll, joined by O’Malley. Dissenting opinion by Lourie.

The Federal Circuit modified and reissued its original opinion following a petition for rehearing filed by Cisco. Our original case summary is reproduced below, but modified in view of the court’s modifications.

A jury found that Cisco willfully infringed two SRI patents and awarded a 3.5% reasonable royalty for a total of $23,660,000 in compensatory damages. After post-trial briefing, the district court upheld the willfulness finding, doubled the damages award, and granted SRI’s motion for attorneys’ fees, compulsory license, and prejudgment interest. Cisco appealed the district court’s claim construction and denial of summary judgment of patent ineligibility under 35 U.S.C. § 101, as well as the court’s grant of summary judgment of no anticipation, enhanced damages, attorneys’ fees, and ongoing royalties. The Federal Circuit affirmed-in-part, vacated-in-part, and remanded.

First, the Federal Circuit upheld the district court’s determination of patent eligibility under § 101, ruling that under step one of the Alice framework, the claims were not directed to an abstract idea. Instead, “the claims are more complex than merely reciting the performance of a known business practice on the Internet and are better understood as being necessarily rooted in computer technology in order to solve a specific problem in the realm of computer networks.”

Second, the Federal Circuit adopted the district court’s construction of the claim term “network traffic data” to mean “data obtained from direct examination of network packets.” The Federal Circuit explained that Cisco’s alternative construction went “too far in limiting the amount of preprocessing encompassed by the claim,” and that SRI had not disclaimed preprocessing during reexamination of the patents.

Third, the Federal Circuit upheld the district court’s sua sponte grant of summary judgment of no anticipation, concluding that the prior art “does not expressly disclose directly examining networking packets as required by the claims—especially not to obtain data about network connection requests.” The Federal Circuit also saw no error in the sua sponte nature of the district court’s order because “Cisco was on notice that anticipation was before the court, and Cisco had the opportunity to put forth its best evidence.”

Fourth, the Federal Circuit determined that substantial evidence did not support the jury’s willfulness finding. Cisco did not know of SRI’s patent until SRI sent a May 8, 2012 notice letter—years after Cisco had independently developed and first sold the accused systems. As such, the jury’s verdict of willful infringement before May 8, 2012 was not supported by substantial evidence. The Federal Circuit thus vacated both the denial of Cisco’s post-trial motion of no willful infringement and the district court’s award of enhanced damages, and remanded for further consideration. The court likewise vacated and remanded the district court’s award of attorneys’ fees under 35 U.S.C. § 285.

Finally, the Federal Circuit determined that the district court did not abuse its discretion in awarding a 3.5% ongoing royalty.

Judge Lourie dissented from the majority’s decision upholding the eligibility of the claims. In Judge Lourie’s view, “they are clearly abstract,” differing “very little” from the claims determined to be abstract in Electric Power Group, LLC v. Alstom S.A., 830 F.3d 1350, 1355 (Fed. Cir. 2016). He explained that “[t]he claims here recite nothing more than deploying network monitors, detecting suspicious network activity, and generating and handling reports.”

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Indivior Inc., et al. v. Dr. Reddy’s Laboratories, S.A., et al., Nos. 2017-2587, 2018-1010, -1058, -1062, -1114, -1115, -1176, -1177, -1949, -2045 (Fed. Cir. (D. Del.) July 12, 2019). Opinion by Lourie, joined by Newman. Dissenting opinion by Mayer.

In a series of appeals and cross-appeals following four bench trials in the district court, the Federal Circuit affirmed the district court’s findings that three patents asserted by Indivior were not infringed and not proved invalid. The Federal Circuit also vacated as moot the district court’s decision holding certain claims of a fourth patent invalid as obvious.

The Indivior patents at issue generally relate to pharmaceutical films and methods of making them. Indivior brought several actions for patent infringement against four generic drug companies who had filed Abbreviated New Drug Applications (ANDAs) to market generic versions of the sublingual film covered by the patents.

The Federal Circuit affirmed the district court’s claim construction of a disputed film drying limitation as “dried without solely employing conventional convection air drying from the top.” The Federal Circuit held that the district court correctly determined that the specification repeatedly disparaged conventional top air drying, and thus disclaimed that method as a sole means of drying the film. Applying this construction, the Federal Circuit ruled that the district court did not clearly err in finding that two of the generic companies did not infringe the patent, as both companies used conventional top air drying methods in their film manufacturing processes.

The Federal Circuit then addressed a third generic manufacturer’s challenge to the district court’s denial of Rule 59 relief after the manufacturer had amended its ANDA following the district court’s determination of infringement. The Federal Circuit ruled that the district court acted within its discretion, noting that “[w]hile Rule 59 gives a court authority to alter or amend a judgment, that authority is exercised only in limited circumstances, such as to prevent a manifest injustice.”

Next, the Federal Circuit addressed the district court’s judgment that another patent was not invalid as indefinite or obvious. The Federal Circuit rejected the argument that a claim limitation (“cast film comprising a flowable water-soluble or water swellable film-forming matrix”) was indefinite because a cast film in its final form is not flowable, instead ruling that product claims “comprising” certain elements do not necessarily require those elements to be present simultaneously. The Federal Circuit next concluded that “the district court did not clearly err in finding that a skilled artisan would not have been motivated” to combine the teachings of the asserted prior art references to create the claimed pharmaceutical films.

The Federal Circuit then turned to infringement and validity of a third patent (the ’150 patent). The court affirmed the judgment that the ’150 patent was not infringed under the doctrine of equivalents because the patent disclosed polyvinyl pyrrolidone as an alternative to hydrophilic cellulosic polymer, but did not claim it, thereby dedicating it to the public. Regarding invalidity, the district court’s determination of nonobviousness focused solely on whether the ’150 patent may properly claim priority from an earlier application. That issue turned on whether the earlier application provided an adequate written description of the claims of the ’150 patent. The Federal Circuit affirmed the district court’s holding that the patent may claim such priority since the applicant’s disclosure “reasonably conveyed to a skilled artisan the films claimed in the ’150 patent.”

Finally, the Federal Circuit vacated as moot the district court’s holding that certain claims of a fourth patent were invalid as obvious in light of a determination by the Patent Trial and Appeal Board in a parallel IPR proceeding (and subsequent affirmance by the Federal Circuit) that those claims were anticipated and obvious.

Judge Mayer dissented because, in his view, three of Indivior’s patents were invalid as obvious over the asserted prior art. He explained that a person of skill in the art would have been motivated to combine the teachings of the prior art references to create the claimed pharmaceutical films. Judge Mayer also dissented from the determination that the ’150 patent was entitled to the priority date of the earlier-filed application because the application did not disclose a specific polymer component recited in independent claim 1.

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