Patent Case Summaries August 5, 2020

Patent Case Summaries | Week Ending July 31, 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.

FanDuel, Inc. v. Interactive Games LLC, No. 2019-1393 (Fed. Cir. (PTAB) July 29, 2020). Opinion by Hughes, joined by Moore. Opinion concurring in part and dissenting in part by Dyk.

FanDuel filed an IPR petition challenging the patentability of various claims, including claim 6. FanDuel argued that claim 6 was obvious over a combination of references, and Interactive Games defended claim 6 by arguing that one of the references was not prior art. In instituting the IPR, the Patent Trial and Appeal Board rejected—for purposes of the institution decision only—the arguments that the disputed reference was not prior art.

In the Final Written Decision, however, the Board did not discuss whether the disputed reference qualified as prior art. Instead, the Board rejected FanDuel’s challenge of claim 6 because there was no motivation to combine the references.

On appeal, FanDuel argued that the Board violated the Administrative Procedure Act by basing its findings as to claim 6 on a “new theory” involving issues that the Patent Owner did not raise. The Federal Circuit disagreed. The Federal Circuit “fail[ed] to see how the Board ‘changed theories’ at all in this case.” The Board’s institution decision had not endorsed FanDuel’s substantive arguments; instead, the Board focused its arguments on the prior art status issue. Then, in the Final Written Decision, the Board substantively analyzed the asserted references and found them insufficient to render claim 6 obvious, without addressing the prior art issue.

The Federal Circuit explained that, to the extent the Board changed theories, it was not required to notify the parties for two reasons. First, the standards of proof differ for instituting review versus invalidating a claim. Second, the burden of proving invalidity remains on the Petitioner throughout the proceeding. Thus, the Federal Circuit “reject[ed] FanDuel’s suggestion that the patent owner’s failure to put forth rebuttal evidence regarding the substance of the references’ disclosures in any way limited the Board’s ability to decide for itself what the references would teach or suggest to a person of skill in the art.”

On the merits, the Federal Circuit determined that the Board’s obviousness findings were supported by substantial evidence. Judge Dyk dissented as to that determination. In his view, “the Board erred when it determined that FanDuel failed to show that claim 6 … would have been obvious because the Board used an incorrect standard for obviousness.”

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Alacritech, Inc. v. Intel Corp., et al., Nos. 2019-1467, -1468 (Fed. Cir. (PTAB) July 31, 2020). Opinion by Stoll, joined by Moore and Chen.

Intel and others filed an IPR challenging claims of a patent owned by Alacritech. The patent concerned offloading network-related processing tasks from a host computer’s CPU to an intelligent network interface card. Among the challenged claims were claims 41–43. The Patent Trial and Appeal Board ruled that all challenged claims were unpatentable as obvious, including claims 41–43. Alacritech appealed.

On appeal, Alacritech argued that the Board’s analysis was inadequate to support its finding that the prior art taught or suggested the “reassembly” limitations in claims 41–43. The Federal Circuit explained that, to support appellate review, “the Board is obligated to provide an administrative record showing the evidence on which the findings are based, accompanied by the agency’s reasoning in reaching its conclusions.” The court does not require “perfect explanations” and “will uphold a decision of less than ideal clarity if the agency’s path may reasonably be discerned.” But the Board’s explanation must be “sufficient for us to see that the agency has done its job.”

The Federal Circuit determined that the Board’s explanations as to the reassembly limitations fell short of the standard. The Federal Circuit stated that while no party disputed that reassembly was disclosed in the prior art, the crux of the dispute was “where reassembly takes place in the prior art and whether that location satisfies the claim limitations.” The Federal Circuit determined that the Board’s analysis “did not acknowledge that aspect of the parties’ dispute, much less explain how the prior art teaches or suggests reassembly in the network interface.” The Federal Circuit therefore vacated the Board’s obviousness determination as to claims 41–43 and remanded.

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XY, LLC, et al. v. Trans Ova Genetics, LC, No. 2019-1789 (Fed. Cir. (D. Colo.) July 31, 2020). Opinion by Stoll, joined by Wallach and Plager.

XY sued Trans Ova for infringement of seven XY patents relating to technology for sex selection of non-human mammals. When XY filed the lawsuit, it had an appeal pending from a prior lawsuit against Trans Ova asserting infringement of different patents directed to similar technology.

Trans Ova filed a motion for judgment on the pleadings arguing that the asserted claims of one of the XY patents are ineligible under 35 U.S.C. § 101. Applying the two-step Alice framework, the district court ruled that the claims were directed to the abstract idea of a “mathematical equation that permits rotating multi-dimensional data,” and further ruled that the claims lacked an inventive concept because XY admitted that each claim element was known in the art.

Trans Ova also filed a motion to dismiss, arguing that XY’s infringement allegations for three of the patents were barred by claim preclusion based on XY’s prior lawsuit. The district court granted the motion and stayed proceedings on XY’s remaining causes of action. XY appealed.

The Federal Circuit reversed the finding of claim ineligibility. Under Alice step one, the claims are not merely directed to a “mathematical equation that permits rotating multi-dimensional data” as the district court found. Rather, “the claims are directed to a purportedly improved method of operating a flow cytometry apparatus to classify and sort particles into at least two populations in real time,” with specific requirements for “facilitating classification and sorting of each individual particle.” Consistent with precedent, the claims “describe in detail a step-by-step method for accomplishing a physical process,” and the claims “implement or apply mathematical formulas in a structure or process which, when considered as a whole, is performing a function which the patent laws were designed to protect.” The claims therefore satisfy the requirements of § 101.

Turning to the issue of claim preclusion, the Federal Circuit vacated and remanded. The district court “erred by failing to compare the currently asserted patent claims to the previously asserted patent claims to determine whether the causes of action in the two lawsuits are essentially the same.” The district court had stated the proper test, but “it did not actually address or compare any of the asserted claims” in the current lawsuit and the prior lawsuit.

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IBSA Institut Biochimique, et al. v. Teva Pharmaceuticals USA, Inc., No. 2019-2400 (Fed. Cir. (D. Del.) July 31, 2020). Opinion by Prost, joined by Reyna and Hughes.

IBSA is the assignee of a patent for a soft gel capsule formulation containing the active ingredient levothyroxine sodium. Teva sought to make a generic version and filed an Abbreviated New Drug Application certifying that the IBSA patent is invalid, unenforceable, or will not be infringed. IBSA filed suit.

In the litigation, the parties disputed the construction of the claim term “half-liquid.” IBSA argued that the term means “semi-liquid, i.e., having a thick consistency between solid and liquid.” Teva offered a competing construction and also argued that the term is indefinite. The district court held the asserted claims invalid as indefinite, and IBSA appealed.

The Federal Circuit upheld the indefiniteness finding. The Federal Circuit first looked to the claim language, ruling that it does not make the meaning of “half-liquid” reasonably clear. Next, the Federal Circuit looked to the specification. Certain passages recited that a “half-liquid” is an alternative to pastes and gels, but pastes and gels “have a thick consistency between a liquid and a solid” and would be included in IBSA’s proposed construction, putting it “at odds with the [specification’s] passages and creat[ing] uncertainty as to the boundaries of a ‘half-liquid.’”

Next, the prosecution history reinforced the Federal Circuit’s conclusion that the applicant intentionally used the term “half-liquid” in the claims instead of “semi-liquid” as recited in IBSA’s proposed construction.

Finally, considering the extrinsic evidence presented to the district court, the Federal Circuit saw no clear error in the court’s determination that “the extrinsic evidence does not supply ‘half-liquid’ with a definite meaning under § 112, where the intrinsic evidence has failed to do so.”

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Takeda Pharmaceuticals U.S.A., Inc. v. Mylan Pharmaceuticals Inc., Nos. 2020-1407, -1417 (Fed. Cir. (D. Del.) July 31, 2020). Opinion by Prost, joined by Hughes. Dissenting opinion by Newman.

Takeda sued Mylan for infringement of seventeen Orange Book-listed patents based on Mylan’s submission of an Abbreviated New Drug Application for a generic version of Takeda’s Colcrys® product, which is a branded version of the drug colchicine. The parties ultimately settled, entering into a License Agreement. The Agreement included a timing clause allowing Mylan to sell a generic colchicine product under certain circumstances. One such circumstance was a final court decision “holding that all unexpired claims of the Licensed Patents that were asserted and adjudicated against a Third Party” were not infringed or were both not infringed and invalid or unenforceable.

Concurrent with its litigation against Mylan, Takeda pursued infringement against Hikma Pharmaceuticals, asserting eight of the Licensed Patents against Hikma’s colchicine product. The parties voluntarily dismissed with prejudice five of the patents, and the court entered final judgment of noninfringement of the remaining three. This prompted Mylan to notify Takeda that Mylan planned to start selling a generic colchicine product pursuant to the timing clause in the License Agreement. Mylan then launched its product, and Takeda filed a new lawsuit alleging breach of contract and patent infringement. Takeda also sought a preliminary injunction, but the district court denied it, finding that Takeda was unlikely to succeed on the merits and had not shown that it would suffer irreparable harm. Takeda appealed.

The Federal Circuit upheld the denial of a preliminary injunction. First, Takeda was unlikely to succeed on the merits of its breach of contract claim due to its erroneous interpretation of the timing clause in the License Agreement. Second, the Federal Circuit noted that Takeda’s assertion of irreparable harm primarily relied on language in the License Agreement tied to a breach of the timing clause. Because there was no breach of the timing clause, Takeda had not shown irreparable harm.

Judge Newman dissented. In her view, the License Agreement provided for an immediate injunction and the litigation against Hikma did not trigger the Agreement’s timing clause such that Mylan was permitted to sell its generic colchicine product.

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American Axle & Manufacturing, Inc. v. Neapco Holdings LLC, et al., No. 2018-1763 (Fed. Cir. (D. Del.) July 31, 2020). Opinion by Dyk, joined by Taranto. Dissenting opinion by Moore.

American Axle & Manufacturing (AAM) sued Neapco for infringement of a patent directed to a method for manufacturing driveline propeller shafts with liners that are designed to attenuate vibrations transmitted through a shaft assembly. The parties filed cross-motions for summary judgment as to the eligibility of the asserted claims under 35 U.S.C. § 101. Addressing representative claims 1 and 22, the district court held that the asserted claims are ineligible because they are “directed to the mere application of Hooke’s law,” and because additional claimed steps were “well-understood, routine, conventional” steps that “add nothing significant beyond the sum of their parts taken separately.” AAM appealed.

In a modified opinion that originally issued in 2019, the Federal Circuit affirmed the district court’s decision that independent claim 22 is directed to the application of Hooke’s law. Under step one of the Alice framework, the Federal Circuit ruled: “What is missing is any physical structure or steps for achieving the claimed result of damping two different types of vibrations. The focus of the claimed advance here is simply the concept of achieving that result, by whatever structures or steps happen to work.” The court explained that its holding “extends only where, as here, a claim on its face clearly invokes a natural law, and nothing more, to achieve a claimed result.” Under Alice step two, the Federal Circuit agreed with the district court that “nothing in claim 22 qualifies as an ‘inventive concept’ to transform it into patent eligible matter.”

The Federal Circuit vacated the district court’s decision that claim 1 is directed to the application of Hooke’s law. In contrast to claim 22, claim 1 was not “merely directed” to the natural law. The Federal Circuit thus remanded as to claim 1 so that the district court could reconsider eligibility.

Judge Moore dissented, stating that the majority “holds that claims are directed to natural laws and are ineligible under § 101 if practicing the method would require application of a natural law and nothing more to achieve the claimed results, even when all of the technical experts disagree.” She continued: “The majority has concluded that the Nothing More question will be decided on appeal as a matter of law, without briefing and argument, and without regard to what the experts think. I cannot fathom the confusion that will be caused by declaring that claims are ineligible as directed to a natural law, when it is clear to all involved that this patent does not recite any particular natural law.”

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