Patent Case Summaries February 22, 2023

Patent Case Summaries | Week Ending February 17, 2023

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.

SSI Technologies, LLC v. Dongguan Zhengyang Electronic Mechanical Ltd., Nos. 2021-2345, 2022-1039 (Fed. Cir. (W.D. Wis.) Feb. 13, 2023). Opinion by Bryson, joined by Reyna and Cunningham.

SSI sued DZEM for infringement of two patents directed to sensors for determining the characteristics of fluid in a container, such as a fuel tank. DZEM asserted counterclaims of patent invalidity and tortious interference with prospective business relations. Following claim construction, the district court granted DZEM summary judgment of noninfringement, granted SSI summary judgment on DZEM’s tortious interference counterclaim, and dismissed DZEM’s invalidity counterclaims without prejudice.

On appeal, the Federal Circuit affirmed in part, reversed in part, vacated in part, and remanded.

Regarding the first patent, SSI appealed the district court’s construction of a Markush group. In construing the claim, the district court relied on the prosecution history where the applicants had amended the claims to incorporate error-detection capabilities described in the specification. The Federal Circuit affirmed the construction, noting the parallelism between the types of errors described in the specification and the claimed Markush group limitations. Second, the district court construed the term “measured” as indicating that the volume of liquid “must be determined and considered.” The Federal Circuit agreed, and thus upheld the district court’s construction. The Federal Circuit additionally agreed with the district court that, under this construction, there was no genuine dispute of material fact regarding DZEM’s noninfringement.

Regarding the second patent, SSI argued that the district court’s construction of the claim term “filter” was impermissibly narrow. The Federal Circuit agreed. The court explained that neither the claims nor the specification restricts the size for the filter openings, notwithstanding that each disclosed embodiment contained “a mesh filter, which has very small openings.” Properly construed, the claimed filter “need only perform the function set forth in” the claims. The filter’s “openings need not be smaller than any particular maximum size.” The Federal Circuit therefore adopted SSI’s construction and vacated and remanded the grant of summary judgment of noninfringement.

Next, the Federal Circuit affirmed the dismissal of DZEM’s tortious interference counterclaims. SSI had sent letters to DZEM’s customers advising them of the lawsuit. SSI argued that its communications were protected under the Noerr-Pennington doctrine. The permissibility of the communications turned on whether “the claims of infringement were objectively baseless.” Here, the district court concluded that they were not objectively baseless, and the Federal Circuit saw “no error in that conclusion.”

Finally, DZEM argued that the district court erred by dismissing its invalidity counterclaims without prejudice. The Federal Circuit explained that, “in general, a determination of noninfringement does not moot a counterclaim of invalidity such that there is no Article III case or controversy.” “However, even in cases in which a district court has jurisdiction to hear a declaratory judgment claim, the Declaratory Judgment Act permits the court to decline to exercise jurisdiction over the claims as a matter of discretion.” Here, the Federal Circuit saw “no abuse of discretion in the district court’s decision to dismiss the counterclaims.” However, because the Federal Circuit vacated the summary judgment decision for one of the patents, it vacated the district court’s dismissal of the invalidity counterclaims for that patent.

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ChromaDex, Inc., et al. v. Elysium Health, Inc., No. 2022-1116 (Fed. Cir. (D. Del.) Feb. 13, 2023). Opinion by Prost, joined by Chen and Stoll.

ChromaDex licenses a patent from Dartmouth directed to dietary supplements containing isolated nicotinamide riboside (NR), a form of vitamin B3 naturally present (in non-isolated form) in cow’s milk and other products. ChromaDex and Dartmouth together sued Elysium for patent infringement. Elysium moved for summary judgment that the asserted claims are directed to unpatentable subject matter under 35 U.S.C. § 101. The district court granted the motion, concluding that the claims are directed to a natural phenomenon, namely, “compositions comprising isolated NR, a naturally occurring vitamin present in cow milk.”

The Federal Circuit affirmed. The court stated that “the claims are very broad and read on milk with only one difference”—the NR in the claims is isolated. The Federal Circuit ruled that “the act of isolating the NR compared to how NR naturally exists in milk is not sufficient, on its own, to confer patent eligibility.” “The claimed compositions remain indistinguishable from natural milk because, other than separation from some other components, the isolated NR is no different structurally or functionally from its natural counterpart in milk.” Thus, because the claims are broad enough to encompass a product of nature, they are invalid under § 101.

The Federal Circuit noted that “the inquiry could end here,” but “if resort to Alice/Mayo is necessary, then at step one we conclude the asserted claims are directed to a product of nature for the reasons stated above, and at step two the claims lack an inventive step because they are directed to nothing more than compositions that increase NAD+ biosynthesis, which is the very natural principle that renders the claims patent-ineligible.”

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Minerva Surgical, Inc. v. Hologic, Inc., et al., No. 2021-2246 (Fed. Cir. (D. Del.) Feb. 15, 2023). Opinion by Reyna, joined by Prost and Stoll.

Minerva sued Hologic and Cytyc for infringement of a patent directed to surgical devices for “endometrial ablation,” a procedure for stopping or reducing abnormal uterine bleeding. The defendants moved for summary judgment of invalidity on the ground that the asserted claims are anticipated under the public use bar of pre-AIA 35 U.S.C. § 102(b). The district court granted summary judgment, finding no genuine factual disputes on the relevant issues.

The Federal Circuit affirmed, ruling that the patented technology met the requirements of being “in public use” and “ready for patenting” before the critical date. In particular, the invention was “in public use” because Minerva had disclosed fifteen devices having the technology at a commercial event, and the disclosure spanned several days where the devices were showcased in a booth, in meetings, and in a technical presentation, all without any confidentiality obligations for those who observed the devices. Also, the technology was “ready for patenting” because “Minerva had created working prototypes and enabling technical documents describing the claimed technology.”

Minerva argued that its prototypes did not function for the intended purpose of performing ablations on “live human” uteri, but the Federal Circuit agreed with the district court that the patent claims are not limited to such devices. Also, mere “later refinements” or “fine tuning” do not preclude application of the public use bar. In any event, the Federal Circuit determined that the factual record did not support Minerva’s argument, and Minerva had prepared enabling documentation that by itself satisfied the “ready for patenting” requirement.

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Lite-Netics, LLC v. Nu Tsai Capital LLC, No. 2023-1146 (Fed. Cir. (D. Neb.) Feb. 17, 2023). Opinion by Taranto, joined by Lourie and Stark.

Lite-Netics and Nu Tsai Capital, LLC d/b/a/ Holiday Bright Lights (HBL) are competitors in the market for holiday string lights. Lite-Netics sued HBL for patent infringement and, both before and after the lawsuit, sent notices to customers of its patent enforcement efforts. HBL counterclaimed for tortious interference and defamation. HBL also moved for, and was granted, a preliminary injunction barring Lite-Netics from suggesting that HBL is a patent infringer, that HBL had copied Lite-Netics’s lights, and that HBL’s customers might be sued. Lite-Netics appealed.

The Federal Circuit held “that the district court abused its discretion in issuing the preliminary injunction because the applicable speech-protective legal standards are not met.” The court explained that “federal patent law preempts state-law tort liability for a patentholder’s good faith conduct in communications asserting infringement of its patent and warning about potential litigation.” HBL’s state-law claims could survive federal preemption “only to the extent that those claims are based on a showing of ‘bad faith’ action in asserting infringement,” which requires a threshold showing that the claims asserted were “objectively baseless.”

Here, the district court had based the preliminary injunction on three legal conclusions with respect to Lite-Netics’s assertion of infringement. The Federal Circuit ruled, however, that “Lite-Netics’s position on all three of those disputes has not been shown, at this stage of the litigation (before, e.g., full claim-construction proceedings or possible expert reports on infringement), to be objectively baseless.” The Federal Circuit therefore vacated the preliminary injunction, but “without finally resolving the underlying disputes about claim construction, prosecution history estoppel, or other issues.”

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Hawk Technology Systems, LLC v. Castle Retail, LLC, No. 2022-1222 (Fed. Cir. (W.D. Tenn.) Feb. 17, 2023). Opinion by Reyna, joined by Hughes and Cunningham.

Hawk sued Castle Retail for infringing a patent directed to “a method of viewing multiple simultaneously displayed and stored video images on a remote viewing device of a video surveillance system.” Castle Retail moved to dismiss the complaint for failure to state a claim, arguing that the claims are directed to ineligible subject matter under 35 U.S.C. § 101. The district court granted the motion. It found that the claims are directed to the abstract idea of storing and displaying video and fail to provide an inventive step that transforms that abstract idea into a patent-eligible invention. Hawk appealed.

The Federal Circuit affirmed. Hawk argued that, under Alice step one, the claims are directed to a specific solution (“performing special data conversion of the video streams” and “digitizing and converting data to change the nature of the data”) to a technical problem (“conserving bandwidth while preserving data”). The Federal Circuit ruled, however, that the step one analysis must focus on the claim language, and here the claims do not disclose performing any special data conversion, describe how the alleged goal of “conserving bandwidth while preserving data” is achieved, or explain what the claimed parameters are or how they should be manipulated.

Next, under Alice step two, the Federal Circuit agreed with the district court that the claims “do not show a technological improvement in video storage and display” because the limitations “can be implemented using generic computer elements” and “using already existing computer and camera technology.” Although the claims recite certain “parameters,” the Federal Circuit determined that the claims “fail to specify precisely what the parameters are,” and “the parameters at most concern abstract data manipulation.” Accordingly, the district court correctly ruled that the claims are directed to ineligible subject matter and are therefore invalid.

Hawk also challenged the district court’s order as procedurally improper because the court considered materials outside the pleadings without converting the motion to dismiss into a motion for summary judgment. Applying regional circuit law, the Federal Circuit held that, although the district court erred, the error did not constitute reversible error because the court’s rationale did not hinge on the materials outside the pleadings. Moreover, Hawk failed to argue to the district court that the motion must be treated as a motion for summary judgment.

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