Patent Case Summaries March 18, 2020

Patent Case Summaries | Week Ending March 13, 2020

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.

Personalized Media Communications, LLC v. Apple Inc., No. 2018-1936 (Fed. Cir. (PTAB) Mar. 13, 2020). Opinion by Stoll, joined by Reyna and Taranto.

In a final written decision in an IPR, the Patent Trial and Appeal Board held certain patent claims unpatentable on anticipation and obviousness grounds. The patent at issue is directed to methods for enhancing broadcast communications with user-specific data by embedding digital signals in those broadcast communications. The parties disputed whether the claim phrase “an encrypted digital information transmission including encrypted information” is limited to digital information or may also include analog information. The Board concluded that it may include analog information, finding in particular that certain statements made during prosecution did not constitute a clear and unmistakable surrender sufficient to rise to the level of disclaimer.

On appeal, Personalized Media Communications (PMC) challenged the Board’s construction. The Federal Circuit first analyzed the claims, concluding that both parties’ proposed constructions were equally plausible in view of the claim language. The court next analyzed the specification, but determined that “it also fails to resolve the scope of the disputed claim term.”

The Federal Circuit then turned to the prosecution history. PMC pointed to three statements that, in its view, limit the scope of the claims to all-digital transmissions. The Federal Circuit agreed, ruling that the Board erred in its treatment of the statements. The Federal Circuit explained: “Even where prosecution history statements do not rise to the level of unmistakable disavowal, they do inform the claim construction.” In particular, an applicant’s “repeated and consistent remarks during prosecution can define a claim term—especially where, as here, there is no plain or ordinary meaning to the claim term and the specification provides no clear interpretation.” The Federal Circuit therefore agreed with PMC that the disputed term is limited to all-digital signals, and thus the court reversed the Board as to the affected claims.

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Communications Test Design, Inc. v. Contec, LLC, No. 2019-1672 (Fed. Cir. (PTAB) Mar. 13, 2020). Opinion by O’Malley, joined by Mayer and Wallach.

Communications Test Design, Inc. (CTDI) filed a declaratory judgment suit in the Eastern District of Pennsylvania “seeking declaratory judgment that its test systems do not infringe” two of Contec’s patents. Six days later, Contec sued CTDI for patent infringement in the Northern District of New York. Contec then moved to dismiss the Pennsylvania action, arguing that CTDI’s anticipatory filing was made in bad faith during licensing discussions. 

The Pennsylvania court recognized that CTDI’s first-filed action is preferred, but nonetheless granted Contec’s motion based on “considerations of judicial and litigant economy, and the just and effective disposition of disputes.” The district court found that “(1) CTDI filed its declaratory judgment complaint in anticipation of Contec’s patent infringement complaint; (2) CTDI’s suit interfered with ongoing negotiations between the parties and did not serve the objectives of the Declaratory Judgment Act; and (3) on balance, the Northern District of New York is a more convenient forum.” CTDI appealed.

The Federal Circuit affirmed the Pennsylvania court’s dismissal of CTDI’s action. The court ruled that “the district court did not abuse the broad discretion accorded to it—both under the Declaratory Judgment Act, 28 U.S.C. § 2201(a) and pursuant to the first-to-file rule.” The Federal Circuit also refused to remand the case for an evidentiary hearing. The court held that there is no requirement that a district court hold an evidentiary hearing when the district court has afforded the parties notice and a fair opportunity to be heard and where there are no material facts in dispute. 

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Kaken Pharmaceutical Co., Ltd., et al. v. Iancu, No. 2018-2232 (Fed. Cir. (PTAB) Mar. 13, 2020). Opinion by Taranto, joined by Newman and O’Malley.

In vacating and remanding the Patent Trial and Appeal Board’s final written decision in an IPR, the Federal Circuit reversed the Board’s claim construction as unreasonable in light of the specification and prosecution history. 

The patent at issue teaches a method of topically treating onychomycosis with efinaconazole. During the IPR, the Board construed “treating a subject having onychomycosis” to mean treating “superficial mycosis that involves disease of the skin or visible mucosa.” Applying the construction, the Board found the challenged claims unpatentable for obviousness. 

On appeal, the Federal Circuit held that the proper construction is narrower than the Board found, ruling that “the broadest reasonable interpretation of ‘treating a subject having onychomycosis’ … is penetrating the nail plate to treat a fungal infection inside the nail plate or in the nail bed under it.”

The Federal Circuit focused on three passages in the specification—two defining the terms “skin” and “nail,” and one characterizing “superficial mycosis.” The specification defined “nail” as including skin structures surrounding the nail plate. The Federal Circuit ruled that “the Board drew an unwarranted inference from that broad definition.” The Board also relied on the specification’s characterization of “superficial mycosis.” The Federal Circuit ruled that, as to this term, the Board made an inference that “runs counter to the specification’s capacious definition of ‘skin’ as including ‘nail.’” The Federal Circuit explained that “the assertion that onychomycosis is a type of disease that lies in the ‘skin’ in no way excludes onychomycosis from being limited to the ‘nail.’” 

The Federal Circuit also looked to the prosecution history, where the patentee had noted that the “treatment of onychomycosis significantly differs from the general treatment of mycoses” and that “onychomycosis is a condition that specifically affects the nail plate.” These statements prompted the examiner to withdraw a rejection and allow the claims, with the examiner noting that the claimed method “penetrates through the nail plate and eradicates the infection at the site.”

The Federal Circuit thus held that, “in light of the specification and prosecution history, … the Board’s claim construction is unreasonable.” Further, because the Board had “relied on its erroneous claim construction throughout its consideration of facts that were part of its obviousness analysis,” the Federal Circuit vacated the Board’s decision and remanded.

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