Patent Case Summaries October 23, 2019

Patent Case Summaries | Week Ending October 18, 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.


Ex parte Spangler, et al., Appeal No. 2018-003800 (Feb. 20, 2019) (designated informative on Oct. 15, 2019). Opinion by Bahr, joined by Wood and Jung.

The Patent Trial and Appeal Board affirmed the Examiner’s decision rejecting certain claims as obvious over the combination of “Bouchard” and “Stec.” The rejection required modifications to the cited art, and the Examiner correctly found that the modifications were “an obvious matter of design choice.”

The asserted invention relates to “a featherseal for turbine engine components” with “first and second tabs extending from the second side” of the featherseal. Bouchard discloses a featherseal that lacks first and second tabs extending from the second side, while Stec discloses a featherseal with first and second tabs, but the tabs are sized and spaced differently than claimed. In finding the claims unpatentable, the Examiner determined that “it would have been an obvious matter of design choice” to resize and reposition the disclosed first and second tabs so that they are sized and spaced as claimed in the Appellants’ application.

On appeal, the Appellants argued that the Examiner’s reliance on design choice was improper because “the tab arrangement is critical.” The Board disagreed, instead siding with the Examiner that the specification “does not provide support for criticality for the length of the tabs or the spacing of the tabs.” The Board concluded that the “relative sizes and particular locations of the tabs are immaterial to providing th[e] locking feature [described in the specification] and, thus, are not critical to Appellants’ invention.” Moreover, the Appellants failed to explain how the tab arrangement “solves any stated problem or is for any particular purpose.” Therefore, the Board upheld the Examiner’s decision rejecting the claims as unpatentable.

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Ex parte Maeda, et al., Appeal No. 2010-009814 (Oct. 23, 2012) (designated informative on Oct. 15, 2019). Opinion by Weatherly, joined by Staicovici and Calve.

The Patent Trial and Appeal Board reversed the Examiner’s decision rejecting certain claims as obvious over the combination of “Wilcox” and “Meserole.” The Examiner’s rejection required modifications to the cited art, but the Board determined that the modifications were not “an obvious design choice” since the claimed invention results in a different function than provided by the cited art.

The asserted invention relates to a “frozen dessert manufacturing apparatus” that includes a “combined passage member … located inside cold storage.” Meserole discloses a combined passage member, but it is not located inside cold storage. The Examiner nonetheless found that the location of Meserole’s combined passage member “is considered to be a matter of obvious choice” because “no criticality or unexpected results are seen or have been disclosed.” 

On appeal, the Appellants argued that moving the combined passage member inside cold storage is not an obvious matter of design choice because the claimed location results in a different function than that shown in Meserole. The Board agreed and therefore reversed the Examiner. The Board explained that “the Examiner failed to provide reasoning based upon rational underpinning to explain why a skilled artisan would have moved the combined passage member of Meserole to cold storage.” In its explanation, the Board “discourage[d] examiners from relying on ‘design choice’ because it is generally a mere conclusion, which is no substitute for obviousness reasoning based on factual evidence.” On the other hand, “‘design choice’ may be appropriate where the applicant fails to set forth any reasons why the differences between the claimed invention and the prior art would result in a different function or give unexpected results.”

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Fraunhofer-Gesellschaft zur Förderung der angewandten Forschung E.V. v. Sirius XM Radio Inc., No. 2018-2400 (Fed. Cir. (D. Del.) Oct. 17, 2018). Opinion by Dyk, joined by Linn and Taranto.

Fraunhofer filed a complaint alleging that Sirius XM Radio (SXM) infringed four patents relating to multicarrier modulation (MCM) technology. Prior to the lawsuit, Fraunhofer entered into a “Master Agreement” giving WorldSpace an “exclusive, irrevocable license, with the right to sublicense, under the MCM Intellectual Property Rights.” WorldSpace, in turn, entered into an irrevocable sublicense agreement with SXM.

WorldSpace eventually filed for bankruptcy and rejected the Master Agreement pursuant to a provision of the Bankruptcy Code. As part of the proceedings, the bankruptcy court approved a settlement between WorldSpace and SXM, emphasizing that “the sublicense would remain in effect.” Years later, Fraunhofer sent a letter to WorldSpace asserting that the Master Agreement had been terminated, and Fraunhofer then sued SXM for patent infringement. The district court dismissed the complaint on the ground that the sublicense agreement was a complete defense to infringement. The district court also denied Fraunhofer’s motion to amend the complaint.

On appeal, the Federal Circuit addressed “whether the Master Agreement was terminated and, if so, whether that termination had the effect of terminating the sublicense.” Fraunhofer argued that WorldSpace’s rejection in bankruptcy unilaterally terminated the contract, but the Federal Circuit deemed that argument untenable because “a rejection breaches a contract but does not rescind it.” Acknowledging that Fraunhofer may have had the right to terminate the Master Agreement, it was unclear whether Fraunhofer had properly done so. The Federal Circuit therefore remanded the issue.  

Next, the Federal Circuit addressed whether SXM’s sublicense rights survived any termination of the Master Agreement. The Federal Circuit disagreed with the district court’s application of state law, explaining that “we have applied Federal Circuit law in several circumstances where the interpretation of a contract is ‘intimately bound up’ with an issue of patent law.” The Federal Circuit ruled that “our law does not provide for automatic survival of a sublicense” and that, here, the “survival of the sublicensee’s rights depends on the interpretation of the Master Agreement.” Because the Master Agreement was ambiguous regarding the survival of sublicense rights, the Federal Circuit vacated the order dismissing the complaint and remanded for the district court to consider “extrinsic evidence of the surrounding circumstances to determine the intent of the parties.”

Lastly, the Federal Circuit reversed the district court’s denial of Fraunhofer’s motion to amend its complaint. Because the rules provide that leave to amend should be “freely given,” and because the district court had not considered “extrinsic evidence of the parties’ intent,” the district court improperly denied Fraunhofer’s motion.

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