Patent Case Summaries March 25, 2020

Patent Case Summaries | Week Ending March 20, 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.

Facebook, Inc. v. Windy City Innovations, LLC, Nos. 2018-1400, -1401, -1402, -1403, -1537, -1540, -1541 (Fed. Cir. (PTAB) Mar. 18, 2020). Opinion by Prost, joined by Plager and O’Malley. Additional views by Prost, Plager, and O’Malley.

Windy City sued Facebook for patent infringement, and Facebook then filed IPR petitions directed to certain claims in the asserted patents. Later, after the one-year time bar of 35 U.S.C. § 315(b) had passed, Windy City identified the claims it was asserting in the district court litigation, prompting Facebook to file additional IPR petitions along with motions for joinder to the earlier IPRs that the Patent Trial and Appeal Board had instituted. The Board granted the motions and ultimately found certain of the challenged claims unpatentable as obvious, including claims challenged only in the later-joined proceedings. Facebook appealed, and Windy City cross-appealed.

In the cross-appeal, Windy City argued that the Board’s decisions granting joinder were improper under the IPR statute and should be reversed. The Federal Circuit agreed, holding that “the Board erred in allowing Facebook to join itself to a proceeding in which it was already a party, and also erred in allowing Facebook to add new claims to the IPRs through that joinder.” The Federal Circuit explained that the text of § 315(c) is clear and unambiguous in not authorizing same-party joinder or the joinder of new issues. 

First, addressing same-party joinder, the Federal Circuit ruled that the statute does not authorize a person to be joined as a party to a proceeding in which it is already a party. “It would be an extraordinary usage of the term ‘join as a party’ [in § 315(c)] to refer to persons who were already parties.” The Federal Circuit noted that the Board’s Precedential Opinion Panel (POP) had reached the opposite conclusion in Proppant Express Investments, LLC v. Oren Technologies, LLC, and the court ruled that the POP’s conclusion “is incorrect under the unambiguous meaning of the statute.”

Second, addressing joinder of new issues, the Federal Circuit ruled that “the language in 315(c) does no more than authorize the Director to join 1) a person 2) as a party, 3) to an already instituted IPR.” The language “does not authorize the joined party to bring new issues from its new proceeding into the existing proceeding, particularly when those new issues are otherwise time-barred.”

The Federal Circuit panel also issued an opinion providing “additional views.” The panel reiterated that the text of § 315(c) is clear and unambiguous. The “additional views” opinion, therefore, addressed “what our alternative holding would be if § 315(c) were deemed ambiguous,” and specifically whether to afford the agency’s interpretation of the statute Chevron deference. The panel concluded that, “were the statute ambiguous, we would alternatively resolve this matter in the same way,” with no deference due to the POP’s interpretation of the statutory provision in Proppant.

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Illumina, Inc., et al. v. Ariosa Diagnostics, Inc., et al., No. 2019-1419 (Fed. Cir. (N.D. Cal.) Mar. 17, 2020). Opinion by Lourie, joined by Moore. Dissenting opinion by Reyna.

The Federal Circuit reversed the Northern District of California’s ruling granting summary judgment that certain claims are invalid under 35 U.S.C. § 101 as directed to an ineligible natural phenomenon.

The two patents at issue are directed to a solution to an identified problem of distinguishing fetal DNA from maternal DNA in the mother’s bloodstream. “Specifically, they claim methods of preparing a fraction of cell-free DNA that is enriched in fetal DNA.”

The Federal Circuit ruled that the claims are directed to patent-eligible subject matter. At the outset, the court noted: “This is not a diagnostic case. And it is not a method of treatment case. It is a method of preparation case.” The Federal Circuit also noted that it was undisputed that the inventors “discovered a natural phenomenon.” However, at step one of the Alice/Mayo test, “it is not enough to merely identify a patent-ineligible concept underlying the claim.” Instead, the issue is whether the claims are “directed to” the natural phenomenon. The Federal Circuit here concluded “that the claims are not directed to that natural phenomenon but rather to a patent-eligible method that utilizes it.” The Federal Circuit therefore reversed the district court’s ineligibility ruling without needing to reach step two of the Alice/Mayo test.

Judge Reyna dissented because, in his view, “the claims are directed to a natural phenomenon.” Judge Reyna believed that “the patents’ only claimed advance is the discovery of that natural phenomenon,” and “the claims, the written description, and the legal precedent applicable to this case all support the conclusion that the patents are ineligible.”

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Hafco Foundry & Machine Co. v. GMS Mine Repair & Maintenance, Inc., No. 2018-1904 (Fed. Cir.  (S.D. W.Va.) Mar. 16, 2020). Per curiam opinion, before Newman, Chen, and Stoll. Opinion concurring in part and dissenting in part by Newman.

Hafco sued GMS for infringement of a design patent for a “Rock Dust Blower.” A jury found GMS liable for willful infringement and awarded damages. After trial, the district court offered a new trial on damages but stayed the new trial pending this appeal.

On appeal, GMS argued that it is entitled to judgment as a matter of law on the issue of infringement and, in the alternative, to a new trial on the issue of infringement. Neither party raised any issue relating to damages.

The Federal Circuit affirmed the judgment of infringement and the district court’s denial of a new trial on that issue. GMS argued that when certain functional and prior art aspects of the design patent are considered, GMS’s design does not infringe. The Federal Circuit ruled, however, that GMS had not made that argument at the district court and had not preserved the argument for appeal.

Next, GMS asserted two errors in the jury instructions for infringement. First, GMS argued that the jury instruction defining an ordinary observer as “a person who buys and uses the product at issue” was a plain error that affected GMS’s rights. The Federal Circuit disagreed, ruling that GMS failed to establish any error “much less plain error warranting a new trial” on infringement.

Second, GMS argued that the jury should have been instructed to “familiarize yourself with each of the prior art designs that have been brought to your attention.” The Federal Circuit rejected the argument because “the record shows no presentation of prior art,” and “GMS does not state otherwise.” Thus, “the purported exclusion of this instruction cannot be error.”

The Federal Circuit therefore affirmed the district court’s judgment of noninfringement and remanded for “any proceedings necessary for a final judgment on damages.”

Judge Newman wrote a separate opinion stating that she “would resolve the matter of damages, for when the facts are not disputed the jury’s application of incorrect law is subject to correction by the court.” Judge Newman would have accepted Hafco’s “proposed remittitur to $110,000, on undisputed application of the correct law,” thus avoiding any need for a new trial on damages.

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