Patent Case Summaries August 12, 2020

Patent Case Summaries | Week Ending August 7, 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.

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 modified and reissued an opinion previously issued in March. In the modified opinion, the Federal Circuit again 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’ sole claimed advance is the discovery of that natural phenomenon,” and “the application of the natural phenomenon utilizes routine steps and conventional procedures that are well known in the art.”

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Bio-Rad Laboratories, Inc., et al. v. 10X Genomics Inc., Nos. 2019-2255, -2285 (Fed. Cir. (D. Del.) Aug. 3, 2020). Opinion by O’Malley, joined by Newman and Taranto.

Following trial, a jury found that 10X willfully infringed three Bio-Rad patents directed to systems and methods for forming microscopic droplets of fluids to perform biochemical reactions. The jury also found that 10X had not proved the patents to be invalid and awarded damages.

On appeal, 10X argued that both prosecution history estoppel and claim vitiation barred Bio-Rad’s doctrine of equivalents theory. Addressing estoppel, the Federal Circuit held that it did not apply because the prosecution history established that the objectively apparent reason for adding the disputed claim limitation “was no more than tangentially related to the equivalent at issue.” Addressing claim vitiation, the Federal Circuit held that it, too, did not apply. 10X’s reading of the Federal Circuit’s case law regarding claim vitiation extended the cases “beyond their facts.” The Federal Circuit specifically “reject[ed] 10X’s attempt to limit the inquiry to a binary choice.”

Turning next to a claim construction issue, the Federal Circuit determined that certain claim preambles are limiting, disagreeing with the district court’s determination that the preambles were only partially limiting. Under the proper construction, the Federal Circuit refused to decide whether 10X’s products infringe, and thus remanded as to the two affected patents.

Next, 10X argued that the damages award should be vacated because Bio-Rad’s expert relied on licenses that were not comparable and because the expert did not apportion damages to the value of the patented technology. The Federal Circuit rejected both arguments and upheld the damages award.

Finally, the Federal Circuit vacated the district court’s injunction with respect to two product lines where 10X had not developed non-infringing alternatives. As to the remaining product lines, the Federal Circuit upheld the injunction, seeing no abuse of discretion in the district court’s “carefully crafted” injunction.

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FastShip LLC v. United States, No. 2019-2360 (Fed. Cir. (Fed. Cl.) Aug. 3, 2020). Opinion by Dyk, joined by Wallach and Chen.

FastShip is the owner of two patents related to increased hull efficiency. The Court of Federal Claims found that certain ship designs manufactured for the United States Navy infringed, and the court awarded reasonable royalty damages. The Claims Court also awarded attorneys’ fees and expenses under 28 U.S.C. § 1498, ruling that “the government’s pre-litigation conduct and positions taken during litigation were not ‘as a whole’ substantially justified.”

On appeal, the Federal Circuit determined that the Claims Court erred in relying on the government’s pre-litigation conduct in awarding fees under § 1498. The Federal Circuit explained that, according to precedent, the statutory language “refers to positions taken by the United States during litigation and does not encompass pre-litigation conduct by government actors.” Thus, the Federal Circuit held that “it was error for the Claims Court to consider the government’s actions during the procurement process and during the administrative proceeding, and the award of fees on that basis was an abuse of discretion.”

Next, the Federal Circuit determined that the Claims Court did not clearly err in its factual findings. Finally, the Federal Circuit ruled that the Claims Court erred in its conclusion that the government’s expert witness had “extraordinary skill and that it was unreasonable to proffer him as a person of ordinary skill in the art because of his decades of experience.” The Federal Circuit stated that “an attack on an expert on the grounds that he is not a person of ordinary skill in the art is meritless.” The Federal Circuit remanded for further consideration.

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Godo Kaisha IP Bridge 1 v. TCL Communication Technology Holdings Ltd., et al., No. 2019-2215 (Fed. Cir. (D. Del.) Aug. 4, 2020). Opinion by O’Malley, joined by Prost and Newman.

IP Bridge asserted infringement of two patents, presenting evidence at a jury trial that the patents are essential to the LTE standard and that TCL’s accused devices are LTE-compatible and thus practice the standard. The jury found that TCL was liable for infringement and awarded damages. The district court denied TCL’s post-trial motions and awarded IP Bridge pre-verdict supplemental damages. The district court also found that the jury’s damages award represented a FRAND royalty rate of $0.04 per patent per infringing product and awarded ongoing royalties in that amount. TCL appealed.

On appeal, the Federal Circuit affirmed “all of the court’s rulings and the verdict predicated thereon.” The Federal Circuit wrote an opinion “only to address—and refute—TCL’s contention that whether a patent is essential to any standard established by a standard setting organization is a question of law to be resolved in the context of claim construction.”

The Federal Circuit explained that, in cases involving standard-essential patents, “we have endorsed standard compliance as a way of proving infringement.” The Federal Circuit recognized, however, that it had not expressly answered the question of “who determines the standard-essentiality of the patent claims at issue—the court, as part of claim construction, or the jury, as part of its infringement analysis?” The Federal Circuit held: “Where, as here, there are material disputes of fact regarding whether asserted claims are in fact essential to all implementations of an industry standard, the question of essentiality must be resolved by the trier of fact in the context of an infringement trial.”

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