Patent Case Summaries March 11, 2020

Patent Case Summaries | Week Ending March 6, 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.

GS CleanTech Corp. v. Adkins Energy LLC, Nos. 2016-2231, 2017-1838 (Fed. Cir. (N.D. Ill.) Mar. 2, 2020). Opinion by Wallach, joined by Reyna and Hughes.

The Federal Circuit affirmed the district court’s determination that CleanTech’s four asserted patents were unenforceable due to inequitable conduct.

The CleanTech patents relate to the recovery of oil from a dry mill ethanol plant’s byproduct called “thin stillage and syrup.” The district court held a bench trial on the issue of inequitable conduct, ultimately concluding that CleanTech committed inequitable conduct through a “complete lack of regard for their duty to the USPTO.” The district court found that the inventors offered their invention for sale before the critical date, took affirmative steps to hide that fact from their lawyers and from the USPTO, allowed one of their attorneys to file a false affidavit, and intended to deceive the USPTO. Additionally, the district court found that the inventors’ attorneys either “purposefully evaded” disclosures or failed to investigate relevant information, and so “participated in the inequitable conduct, choosing advocacy over candor.”

Recounting the pertinent facts and circumstances in detail, the Federal Circuit affirmed, ruling that the district court did not abuse its discretion in determining that CleanTech’s patents are unenforceable due to inequitable conduct.

The inequitable conduct claim related to whether the inventors failed to disclose information that would have implicated the on-sale bar under 35 U.S.C. § 102(b). The Federal Circuit walked through each aspect, ruling that the district court did not abuse its discretion in determining that the claimed invention was (i) the subject of a pre-critical date offer for sale, and (ii) ready for patenting before the critical date. On the latter issue, the Federal Circuit rejected CleanTech’s arguments, finding them to be “meritless and misleading.” 

Lastly, the Federal Circuit ruled that the district court did not abuse its discretion in concluding that CleanTech and its attorneys deliberately withheld material information with specific intent to deceive the USPTO. The Federal Circuit explained that the district court “did not abuse its discretion in determining for numerous reasons that CleanTech deliberately withheld material information.” The court recounted five of those reasons, ultimately affirming the district court.

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Comcast Corp., et al. v. ITC, Nos. 2018-1450, -1653, -1667 (Fed. Cir. (ITC) Mar. 2, 2020). Opinion by Newman, joined by Reyna and Hughes.

Rovi Corp. and Rovi Guides, Inc. filed an ITC complaint alleging a violation of Section 337 of the Tariff Act of 1930 due to patent infringement by various Comcast, ARRIS, and Technicolor entities. The Commission found that Comcast’s customers directly infringed, and that Comcast induced infringement of, two Rovi patents directed to an interactive television program guide system for remote access to television programs. The Commission also found, however, that ARRIS and Technicolor did not directly or contributorily infringe the patents. Based on these findings, the Commission entered a limited exclusion order excluding importation of “X1” set-top boxes by Comcast, including importation by ARRIS and Technicolor on behalf of Comcast.

On appeal, the appellants first argued that the appeal had become moot, warranting vacatur of the Commission’s determination of violation, because the patents had expired. The Commission and Rovi opposed, arguing that finality is warranted because there are ongoing “collateral consequences,” referring to two ITC investigations on unexpired Rovi patents involving X1 set-top boxes. The Federal Circuit ruled that the appeal is not moot, concluding “that there are sufficient collateral consequences to negate mootness.”

Next, Comcast argued that it had not violated Section 337 of the Tariff Act of 1930 because the imported X1 set-top boxes do not infringe at the time of importation and, further, because Comcast is not an importer. The Federal Circuit rejected both arguments. First, “Section 337 applies to articles that infringe after importation.” Second, whether a party is an importer is a question of fact, and the Commission’s finding that Comcast was an importer was supported by substantial evidence. For example, even though ARRIS and Technicolor were the importers of record, there was “extensive evidence of Comcast’s control over the importation of the X1 set-top boxes.” 

Lastly, ARRIS and Technicolor argued that the limited exclusion order was improperly applied to them, since they were found not to infringe. The Commission responded that the order is limited to importations on behalf of Comcast as to articles whose intended use is to infringe. The Federal Circuit upheld the limited exclusion order because “[t]he Commission has discretion in selecting a remedy that has a reasonable relation to the unlawful trade practice.” 

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Customedia Technologies, LLC v. Dish Network Corp., et al., No. 2018-2239 (Fed. Cir. (PTAB) Mar. 6, 2020). Opinion by Moore, joined by Prost and Dyk.

Dish initiated covered business method proceedings challenging certain claims of two Customedia patents directed to comprehensive data management and processing systems. The Patent Trial and Appeal Board held the claims ineligible under 35 U.S.C. § 101, among other rulings. 

On appeal, the Federal Circuit addressed the Supreme Court’s two-step Alice framework for determining patent-eligibility. At Alice step one, the Federal Circuit considered whether the claims are directed to a “patent-ineligible concept,” such as an abstract idea. Customedia argued that its claims are eligible because they “provide for improvements to the operation and functioning of computer systems.” The Federal Circuit disagreed, ruling that the claims “are directed to the abstract idea of using a computer to deliver targeted advertising to a user, not to an improvement in the functioning of a computer.” 

In its analysis, the Federal Circuit recounted its precedent involving patent-eligible improvements to computer functionality as well as its precedent involving patent-ineligible abstract processes that “invoke[e] a computer merely as a tool.” Against that background, the Federal Circuit agreed with the Board that the claims here at issue are not directed to a patent-eligible improvement to computer functionality. Instead, the claims “merely recite reserving memory to ensure storage space is available for at least some advertising data.”

Turning to Alice step two, the Federal Circuit agreed with the Board that “the elements of the claims, considered individually and as an ordered combination, fail to recite an inventive concept.” The Federal Circuit therefore affirmed the Board’s determination that the challenged claims are ineligible under § 101.

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