Patent Case Summaries October 16, 2019

Patent Case Summaries | Week Ending October 11, 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.

B.E. Technology, L.L.C. v. Facebook, Inc., No. 2018-2356 (Fed. Cir. (W.D. Tenn.) Oct. 9, 2019). Opinion by Lourie, joined by O’Malley. Concurring opinion by Plager.

After B.E. sued Facebook for patent infringement in district court, Facebook and others filed petitions for IPR directed to the asserted claims. The district court stayed its proceedings, and the Patent Trial and Appeal Board found the claims to be unpatentable. The Federal Circuit affirmed the Board’s ruling, prompting Facebook to move to dismiss the district court case and to seek costs under Fed. R. Civ. P. 54(d). The district court dismissed the case as moot and ruled that Facebook was a “prevailing party” and therefore entitled to costs.

B.E. appealed, arguing that because the case was dismissed as moot, Facebook did not “prevail” in the district court. The Federal Circuit disagreed, holding that Facebook was a “prevailing party” entitled to costs. As the Federal Circuit explained, the Supreme Court has stated that “[c]ommon sense undermines the notion that a defendant cannot ‘prevail’ unless the relevant disposition is on the merits.” The Supreme Court remarked that a “defendant has … fulfilled its primary objective whenever the plaintiff’s challenge is rebuffed, irrespective of the precise reason for the court’s decision.” Applying this precedent, the Federal Circuit ruled that “a defendant can be deemed a prevailing party even if the case is dismissed on procedural grounds rather than on the merits.” The court therefore affirmed the district court’s award of costs.

In a three-sentence concurring opinion, Judge Plager noted that the court’s decision “is clearly correct” as “can be seen had Facebook moved for, and been granted, not a ‘moot’ dismissal, but a dismissal under Fed. R. Civ. P. 12(b)(6).”

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HZNP Medicines LLC, et al. v. Actavis Laboratories UT, Inc., Nos. 2017-2149, -2152, -2153, -2202, -2203, -2206 (Fed. Cir. (D.N.J.) Oct. 10, 2019). Opinion by Reyna, joined by Prost. Opinion concurring in part and dissenting in part by Newman.

HZNP Medicines and Horizon Pharma USA (Horizon) sued Actavis for alleged infringement of patents relating to methods and compositions for treating osteoarthritis. During claim construction, the district court found three terms to be indefinite. The district court also awarded Actavis summary judgment of no induced infringement as to certain claims. Finally, the district court held a bench trial as to one remaining claim, finding that the claim was not obvious. Horizon appealed the indefiniteness and summary judgment rulings, and Actavis cross-appealed the nonobviousness ruling.

In a lengthy decision addressing each of these issues, the Federal Circuit affirmed. The court focused in particular on the indefiniteness of certain claims reciting a formulation “consisting essentially of” various ingredients. In a divided opinion on that issue, the Federal Circuit upheld the finding of indefiniteness.

The Federal Circuit explained that “the phrase ‘consisting essentially of’ has a distinct meaning within our jurisprudence.” The phrase permits inclusion of ingredients not listed in the claim, “provided that they do not ‘materially affect the basic and novel properties of the invention.’” The Federal Circuit addressed “whether the Nautilus definiteness standard applies to the basic and novel properties of an invention.” Under Nautilus, claims are invalid for indefiniteness if, when read in light of the specification and prosecution history, they “fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention.”

Horizon argued that the Nautilus standard focuses on the claims and therefore does not apply to the basic and novel properties of the invention. The Federal Circuit disagreed: “By using the phrase ‘consisting essentially of’ in the claims, the inventor in this case incorporated into the scope of the claims an evaluation of the basic and novel properties.”

On the facts of this case, the Federal Circuit affirmed the district court’s finding that the specification and prosecution history failed to provide objective boundaries of the basic and novel properties of the invention. Therefore, the “consisting essentially of” claims were indefinite.

Judge Newman dissented from the majority’s decision to affirm the “consisting essentially of” claims as indefinite. In particular, she disagreed with the holding that, by using the phrase “consisting essentially of” in the claims, the inventor incorporated into the scope of the claims an evaluation of the basic and novel properties. In Judge Newman’s view, “That is not correct as a matter of claim construction, it is not the law of patenting novel compositions, and it is not the correct application of section 112(b).”

Judge Newman also dissented from the majority’s decision to affirm the summary judgment ruling of no induced infringement. According to Judge Newman, the majority held that there can be no liability for induced infringement because some patients may not follow the label instructions. While acknowledging that “patients may not always comply with instructions,” Judge Newman explained that “this does not insulate the provider from infringement liability” since the label “instructs users to perform the patented method.”

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