Sanctions May Be Awarded for Violation of Injunction, Despite Good Faith Attempt to Redesign
Infringement Is Not a Static Thing
BPAI's Misunderstanding of Prior Art Is Not a "Harmless Error"
"Irreconcilably Inconsistent" Jury Verdicts Require a New Trial
D.C. Circuit Rejects FDA's Interpretation of "Failure to Market" Forfeiture Provisions
Industrial Applicability in European Gene Patents—Divergences between the EPO and the UK
Federal Circuit Affirms Summary Judgment Ruling on Obviousness
Applying the Egyptian Goddess "Ordinary Observer" Test
The Line Between an Ordinary Order and a Preliminary Injunction
Old Secrets in the (Red) Light of the Cockpit
Registration Requirement Does Not
Restrict a Subject-Matter Jurisdiction Over Infringement Claims
Involving Unregistered Works
Paul Devinsky and Rita Weeks
In a unanimous decision, the Supreme Court of the United States held that although the Copyright Act's registration requirement, 17 U.S.C. § 411(a), is a precondition to filing a copyright infringement claim, a copyright holder's failure to comply with that requirement does not restrict a federal court's subject-matter jurisdiction over infringement claims involving unregistered works. Reed Elsevier, Inc. v. Muchnick, Case No. 08-103. (Supr. Ct., Mar. 2, 2010) (Thomas, Justice).
This case matured from multiple class action lawsuits filed by freelance authors alleging copyright infringement based on electronic publication of their works when the works had only been licensed to be published in print form. After the Supreme Court's 2001 decision in New York Times Co. v. Tasini, the class actions were consolidated and referred to mediation.
The parties reached a settlement allowing payment to all authors, including authors whose works had not been registered with the Copyright Office, in exchange for permission to publish the works electronically. Under the settlement, authors with registered works were given priority in payment and higher compensation, whereas authors of unregistered works received less compensation, which could be reduced to nothing depending on the availability of funds. After the court approved the settlement and certified the class, objecting class members (authors of unregistered works) appealed.
The U.S. Court of Appeals for the Second Circuit invalidated the settlement, finding that under § 411(a) the district court lacked subject matter jurisdiction over the claims concerning unregistered works and that every member of the class must meet the jurisdictional requirement of § 411(a) for the district court to possess subject matter jurisdiction over the case. Second Circuit further found that subject matter jurisdiction could not be cured by supplemental jurisdiction. Accordingly, the Second Circuit vacated and remanded the settlement. A dissent argued that the district court did possess subject matter jurisdiction, arguing that § 411(a) was merely a "claim processing" requirement and not a jurisdictional one.
The Supreme Court granted certiorari, limited to the jurisdictional issue, and reversed. The Supreme Court held that the registration requirement of § 411(a) did not prevent a federal district court from entering an order affecting unregistered copyrights. The Supreme Court explained:
Citing Arbaugh v. Y & H Corp. (2006), the Supreme Court explained that a statutory requirement is only jurisdictional if Congress "clearly states that [it] count[s] as jurisdictional" and that a condition "not rank[ed]" as such should be treated "as nonjurisdictional in character." After noting that §411(a) does not "clearly state" that its registration requirement is jurisdictional, the Court analyzed the statutory language of the Copyright Act and its legislative history, finding that both weighed against finding the requirement jurisdictional. The Supreme Court further noted that the registration requirement is located in a provision separate from the jurisdictional provisions and concluded that finding §411(a) to be a jurisdictional requirement would be inconsistent with the Act's provisions explicitly permitting claims involving unregistered works in certain circumstances.
Sanctions May Be Awarded for Violation of
Injunction, Despite Good Faith Attempt to Redesign
Melody Wirz
Affirming a district court's contempt ruling, the U.S. Court of Appeals for the Federal Circuit found that good faith attempts to design around cannot save an infringer from a finding of contempt when the product is not "more than colorably different." TiVo, Inc. v. EchoStar Corp. et al., Case No. 09-1374 (Fed Cir. Mar. 4, 2010) (Lourie, J.)(Rader, J. dissenting).
In 2004, TiVo brought suit against EchoStar based on receivers that allow users to simultaneously record and play television broadcasts, as claimed in TiVo's asserted patent. The district court entered judgment on the jury verdict of lost profits and reasonable royalties, issuing a permanent injunction against EchoStar and ordering EchoStar to stop making, using, offering to sell and selling receivers that had been found infringing by the jury. The district court further ordered EchoStar to disable digital video recording functionality in existing receivers. Following an appeal on unrelated issues, TiVo moved the district court to find EchoStar in contempt. The district court ruled that EchoStar was in contempt, because the modified product continued to infringe, despite attempts at redesign. The district court additionally found that, even if EchoStar had succeeded in a non-infringing design-around, it would still have been in contempt because it had not complied with the disablement provision. The district court held that the disablement provision extended to all digital video recording functionality and not just infringing functionality.
On appeal, EchoStar argued that the district court abused its discretion in finding contempt because the firm had redesigned the product in a non-infringing manner and had disabled the infringing digital video recording functionality in existing receivers. On appeal, the Federal Circuit found no abuse of discretion because the contempt analysis did not require "clear and convincing" evidence that a contempt proceeding was appropriate. The Federal Circuit further found that the modified product continued to infringe and that the disablement portion of the permanent injunction was not limited to infringing functionality, but instead extended to all digital video recording functionality. The Federal Circuit also agreed with the district court that EchoStar's attempts to design around TiVo's patent were "wholly unsuccessful." In response to EchoStar's arguments that it spent 8,000 hours working on the issue and obtained a non-infringement opinion, the Federal Circuit stated that good faith attempts to design around "cannot save an infringer from a finding of contempt."
In dissent, Judge Rader asserted that it is unreasonable to extend the injunction to all digital video recording functionality, rather than only infringing functionality. Judge Rader further asserted that the difference between the redesigned receivers and the infringing receivers "seems far 'more than colorably different'" because the theory necessary to find infringement is entirely different. In particular, Judge Rader pointed to contradictory theories required to find infringement of the original receivers and the redesigned receivers. Because EchoStar eliminated the "very structure" that served as the basis for infringement at trial and had shown substantial good faith efforts to comply with the permanent injunction, Judge Rader stated that a new infringement suit, not a contempt proceeding, was the appropriate avenue for recovery.
Both TiVo and EchoStar plan to seek en banc review by the full Federal Circuit.
Infringement Is Not a Static
Thing
Brett Bachtell
In affirming the district court's holding that the defendants infringed the asserted claims in connection with one service product, but not two others, the U.S. Court of Appeals for the Federal Circuit outlined the procedures for applying many recent precedential decisions on claim construction infringement and willfulness. Trading Technologies Int'l, Inc. v. eSpeed, Inc. et al., Case Nos. 08-1392, -1392, -1422 (Fed. Cir. Feb. 25, 2010) (Rader, J.).
Plaintiff Trading Technologies International, Inc. (TT) sued eSpeed, alleging infringement of its patents relating to software for displaying the market for a commodity traded in an electronic exchange. More specifically, the patents are directed to displaying trading values in a static manner to allow a user to have confidence that an offer is being made at an intended price. In prior technologies, the trading values would change dynamically with market changes causing users difficulty in entering an order at the appropriate price.
The defendants, collectively eSpeed, provide an electronic exchange for trading commodities and design and sell trading platforms for use with their electronic exchanges.
The parties disputed whether certain eSpeed offerings included the claimed "static display of prices" or "static price axis." The dispute concentrated on the way the accused platforms re-center the price levels when market values change and subsequently move away from the center of the display. Following a four week trial, the jury found that on of the older platforms willful infringed and awarded TT $3.5 million in damages based on a reasonable royalty. After the jury trial, the district court held a two-day bench trial on inequitable conduct. The trial court ruled the TT did not engage in inequitable conduct. The district court also denied eSpeed's judgment as a matter of law (JMOL) motions on validity, indefiniteness, priority date and patent misuse, but vacated the jury's finding of willful infringement and remitted the damages award to about $2.5 million.
Claim Construction and Literal Infringement
The Federal Circuit initially reviewed the trial court's findings about the meaning of the disputed claim term "static." The trial court, based on a review of the prior art, assessed the meaning of the claim term to a person of ordinary skill in the art and the prosecution history concluded that the term "static," as used in the claims, required a manual re-centering command to be entered by a user to change the price axis of the display. On appeal, TT argued for a construction of the word "static" that did not mean immovable. However, the Federal Circuit affirmed the construction of the trial court. In re-applying the affirmed construction, the Federal Circuit also affirmed the non-infringement determination in relation to certain of eSpeed's platforms. The Federal Circuit opined that because those platforms lack "price levels that do not change positions unless a manual re-centering command is received," the products did not literally infringe the patents-in-suit.
Doctrine of Equivalents
The district court concluded that TT was estopped from relying on the doctrine of equivalents. The trial court reasoned that claim vitiation and prosecution history estoppel barred assertion of infringement by equivalents. On review, the Federal Circuit stated that claim vitiation applies when there is a "clear, substantial difference or a difference in kind" between the claim limitation and the accused product and that it does not apply if there is a "subtle difference in degree." The Federal Circuit affirmed the determination that a price axis that moves only in response to the trader's instruction versus a price axis that adjusts itself without prompting is not a subtle difference. The Federal Circuit then confirmed that an accused platform's automatic re-centering feature is substantially different from the claimed invention and cannot fall within the scope of the claims under the doctrine of equivalents without "doing violence" to the "static" claim element. Accordingly, the Federal Circuit affirmed the trial court's judgment that TT could not rely on the doctrine of equivalents to show that either of the non-literally infringing platforms infringed the patents-in-suit under the doctrine of equivalents.
Willful Infringement
TT argued that, because eSpeed began redesigning certain of its platforms immediately after the suit commenced and replaced an accused product with another, eSpeed should have been found to willfully infringe the asserted patents. The Federal Circuit, reviewing the trial court's grant of the JMOL motion without deference, while viewing all the evidence in the light most favorable to the nonmoving party (in accordance with the law of the Seventh Circuit), affirmed the trial court and held that prompt redesign efforts and complete removal of infringing products in a span of a few months, if anything, supported a determination that eSpeed was not objectively reckless and did not willfully infringe the patents-in-suit.
BPAI's Misunderstanding of Prior Art
Is Not a "Harmless Error"
Tianxin (Cynthia) Chen, Ph.D.
Addressing the proper standard of review of the factual determinations made by the Board of Patent Appeals and Interferences (BPAI or the Board), the U.S. Court of Appeals for the Federal Circuit vacated and remanded the BPAI's decision that the claims on appeal were obvious. In re Chapman, Case No. 09-1270 (Fed. Cir. Feb. 24, 2010) (Dyk, J.).
The claims of the Chapman application were directed to a derivative antibody in which the two heavy chains of the antibody are linked to each other via a polymeric linker.
The examiner rejected the claims under 35 U.S.C. § 103 in view of prior art that described "linking antibody fragments to a polymer to increase an antibody's circulating half-life for therapeutic purposes" and "linking two antibody fragments with a polymer to form a 'dumbbell-shaped' structure." The Board affirmed the examiner's obviousness rejection. On appeal, the U.S. Patent and Trademark Office (USPTO) conceded that the Board had misinterpreted the teachings of the prior art but argued that the errors were harmless.
The Federal Circuit first noted that the standard of review of Board's factual findings is "substantial evidence." The Court then applied the same "harmless error" rule that it applies to factual determinations from district courts. The Court found that the Board's misinterpretation of the prior art was not harmless, as the misinterpretation called into question the Board's legal determination of obviousness. In particular, two of the three errors were found to be harmful. First, the Court held that if the Board misinterpreted whether the prior art it taught the use of a polymer to link between the light chain and the heavy chain of an F(ab')2 antibody fragment, then Chapman's invention (i.e., using a polymer to link two F(ab') fragments) "may be less obvious." Second, "if the Board did not appreciate the full scope of antibody fragments disclosed in [the prior art]," then the Court could not "be confident about its ultimate conclusion that the selection of one of them to form Chapman's molecule is obvious, as it appears that there are more possibilities from which to choose." Therefore, because the Court could not "say with confidence that the Board would have reached the same conclusion in the absence of these errors," it held that the errors were "indeed harmful."
Practice Note: Interestingly, despite the fact that the Board had made several prejudicial errors in making its obviousness determination, the Court did not reverse the Board's legal conclusion of obviousness. Instead, the Court remanded the case so that the Board can "revisit" its obviousness assessment in view of a correct understanding of the prior art.
This case suggests that a Board's error is harmful if the error increases the likelihood that the Board's assessment of patentability is erroneous or if the Federal Circuit cannot confidently conclude, upon appellate review, that the Board would have reached the same decision in the absence of the error.
"Irreconcilably Inconsistent"
Jury Verdicts Require a New Trial
Stephen M. Yu
The U.S. Court of Appeals for the Federal Circuit vacated a district court's final judgment and remanded the case for a new trial after a jury returned "irreconcilably inconsistent" verdicts. Comaper Corp. v. Antec, Inc., Case Nos. 09-1248, -1249 (Fed. Cir. Mar. 1, 2010) (Dyk, J.).
The new trial was ordered because a jury inexplicably found dependent claims obvious but found the independent claims on which those claims depend non-obvious. This marks the second time in less than seven months that the Federal Circuit has reversed a district court's decision on such grounds - the first occurring in Callaway Golf Co.
The jury returned a "special verdict" in which it found that defendant Antec had willfully infringed a patent relating to a cooling device for a computer, that the asserted claims were not anticipated by prior art and that independent claims 1 and 12 were not invalid as obvious. However, the jury also found that claims 2 and 7, which depend on claim 1, and claim 13, which depends on claim 12, were invalid as obvious. Here, the inconsistency arose because a broader independent claim cannot be non-obvious where a dependent claim stemming from that independent claim is obvious.
Third Circuit law recognizes that if verdicts are genuinely inconsistent and the evidence might support either inconsistent verdict, the appropriate remedy is ordinarily to order a new trial. Attempting to reconcile the verdicts, the district court concluded that the evidence was insufficient to show that the dependent claims were obvious. The Federal Circuit disagreed.
The Federal Circuit reasoned that the district court incorrectly concluded that the prior art proffered by the defendant was not analogous to the patented invention. Interestingly, the Federal Circuit also noted that the district court may have applied the wrong standard for determining obviousness. Rather than applying the obviousness standard, the district court appeared to have applied the more rigorous standard governing anticipation, i.e., that all the claimed elements of the patent must appear in a single piece of prior art.
Upon reviewing the evidence, the Federal Circuit held that it was proper for the jury to consider the prior art asserted by the defendant and, under the correct standard for obviousness, the evidence was sufficient to support the jury's obviousness verdict. Therefore, because the district court omitted certain evidence, misunderstood the test for analogous prior art and misapplied the standard for obviousness, the Federal Circuit vacated the district court's judgment and ordered a new trial on the issue of obviousness.
Practice Note: Because not all district court judges thoroughly understand patent law, always make a pre-verdict motion for judgment as a matter of law (JMOL), under Fed. R. Civ. P. 50(a), to preserve a basis for a post-trial JMOL, under Fed. R. Civ. P. 50(b). Despite Antec's failure to make a pre-verdict motion, a new trial on obviousness was granted because a pre-verdict motion is not required for a "special verdict" under Fed. R. Civ. P. 49(b). In contrast, Antec had forfeited its right to challenge the jury verdict on infringement and anticipation.
D.C. Circuit Rejects FDA's
Interpretation of "Failure to Market" Forfeiture
Provisions
Astrid R. Spain
The U.S. Court of Appeals for the D.C. Circuit recently rejected the interpretation of the Food and Drug Administration (FDA) of the "failure to market" forfeiture provisions of the 2003 Medicare Modernization Act amendments (2003 MMA amendments) to the Hatch-Waxman Act. Teva Pharmaceuticals USA, Inc. v. Sebelius, Case No. 09-5281 (D.C. Cir. Mar. 2, 2010) (Williams, Sr., J.).
The 2003 MMA amendments to the Hatch-Waxman Act added forfeiture provisions to the statute. Under the provisions, a generic applicant can lose its 180-day exclusivity rights under certain circumstances. For example, the 2003 MMA amendments provide that a generic company forfeits its 180-day exclusivity period if the patent information submitted by the branded company is withdrawn. The 2003 MMA amendments further provide for a declaratory judgment counterclaim by a generic applicant to force a branded company to delist erroneously listed patents. Based on these changes in the statute, the FDA interpreted relevant parts of the 2003 MMA amendments literally, so that exclusivity was forfeited whenever patent information was withdrawn by the branded company.
Teva had filed Paragraph IV certifications against one patent listed in the Orange Book for Merck's Cozaar® and Hyzaar® products. Rather than suing, Merck asked the FDA to delist the challenged patent. Already faced with two unrelated prior FDA rulings ordering forfeiture of the 180-day marketing exclusivity based on patent delisting, Teva challenged the FDA's interpretation when it learned that Merck's patent had been delisted. The district court granted summary judgment upholding the FDA's interpretation.
On appeal, Teva argued that the declaratory judgment provisions added by the 2003 MMA amendments should be the only scenario in which the FDA may delist a challenged patent. Teva reasoned that nothing in the 2003 MMA amendments altered the essential incentive structure that Congress had set forth in the Hatch-Waxman statute. The court rejected Teva's argument that declaratory judgment delistings are the only delistings permitted under the Hatch-Waxman Act. However, in ultimately ruling for Teva, the court read the statute as a whole, stating that all of the other forfeiture provisions required some participation by the generic drug maker and, therefore, the 2003 MMA amendments must not be read to mean that brand companies "should be newly able to delist challenged patents, thereby triggering a forfeiture event that deprives generic companies of the period of marketing exclusivity they otherwise deserve."
Industrial Applicability in European Gene
Patents—Divergences between the EPO and the
UK
Andrew Sharples
Although industrial applicability is one of the three requirements—along with novelty and an inventive step—for an invention to be patentable, it is rarely relied upon as a ground for invalidity. However, a recent dispute has shown that this can be a successful ground for attacking the validity of patents directed at genetic sequences. Eli Lilly and Co. v. Human Genome Sciences Inc. [2010] EWCA Civ 33 (High Ct. of Justice Ct. of Appeal, Feb. 9, 2010) (Jacob, Lord Justice).
This dispute was fought both before the UK courts and in opposition proceedings before the European Patent Office (EPO). This was the first time the question of industrial applicability had been truly put in issue before the UK courts, and it was also one of the few times the issue had arisen at the EPO in inter partes proceedings.
At first instance, both the Court and the EPO found the patent invalid for lack of a disclosed industrial applicability for the claimed invention. However, the decisions reached on appeal differed, with the UK court upholding the earlier decision to find the patent invalid, whilst at the EPO it was held that the patent was valid and did disclose an industrial applicability. These differing decisions were reached despite the same principles of law being applied, and while the divergent outcomes could be explained by the two tribunals being presented with different evidence, it does seem that the EPO and at least one national court may be applying different standards to determine when a patent will or will not be valid.
Human Genome Sciences, using a bioinformatics approach, elucidated a nucleotide sequence which encoded for the protein "neutrokine-α". This protein seemed to be part of the TNF family of proteins, a group of proteins known to have effects on the immune system. HGS obtained a patent for neutrokine-α; the patent was subsequently attacked by Eli Lilly on a number of grounds, including that the patent lacked an industrial applicability.
Whether under UK national law or before the EPO, in order to be patentable, an invention must be capable of industrial applicability. The EPC makes clear that "the description shall indicate explicitly, when it is not obvious from the description or nature of the invention, the way in which the invention is capable of exploitation in industry." In most cases, no explicit indication is necessary as the industrial applicability will be immediately obvious from the nature of the invention. However, if proteins have been elucidated using a bioinformatics approach, this is not necessarily the case. It was because of this that the Biotech Directive included a specific provision, later incorporated into the EPC, requiring that the industrial application of a sequence or a partial sequence of a gene must be disclosed in the patent application.
The case law of the EPO has provided guidance as to what must be disclosed in order to meet this requirement of industrial applicability. In essence, the disclosure must provide an "immediate, concrete benefit," be more than a speculative indication of possible objectives that might or might not be achievable by carrying out further research and not be so vaguely defined that no practical application or profitable use can be envisaged. The HGS patent disclosed thatαwas a TNF family member. Based on this, the patent disclosed that neutrokine-αcould be used to treat a large number of specific diseases; in some cases these treatments were contradictory in nature. The patent's description covered most diseases a person might suffer from. Ironically, HGS has gone on to develop a product based on neutrokine-α for the treatment of lupus, one of the few diseases not mentioned in the patent.
The question of whether the disclosure was enough for the HGS patent to meet the requirements of disclosing an industrial applicability first came to be determined by the Technical Board of Appeals (TBA). In examining the facts, the TBA concluded that all members of the TNF family had a shared property (namely the ability to co-stimulate T-cell proliferation),and that this property was disclosed in the patent. The fact this disclosure was made alongside numerous contradictory statements and a wide range of conditions and diseases was held not to be relevant by the TBA, which commented that the skilled person (to whom a patent is notionally addressed) is capable of distinguishing these kinds of statements from the positive technical information provided.
The TBA commented that the skilled person would realize that the provision of the structure neutrokine-αand the ascribing of neutrokine-α to the TNF protein family were the first essential steps at the onset of a research program to elucidate all the properties of the protein. It was prima facie reasonable to expect most of the long list of disclosed functions and potential treatments to be present for neutrokine-α. It is a common practice for patentees to file application with long list of diseases and activities, the patentees subsequently relying on those few which are later confirmed. The skilled person is aware of this and can therefore distinguish the real technical information from the "boiler-plate" features. In light of this, the TBA found that there was an industrial application disclosed in the HGS patent, the patent being deemed to provide a "concrete benefit."
Even if a patent has been found valid at the EPO, it is still possible for the patent to be revoked in one or more member states. Consequently, a few weeks after the decision of the TBA, the same question of industrial applicability was heard before the UK Court of Appeal.
The first question the UK Court faced was whether the Court should be in principle be able to differ from the decision of the TBA in this instance. The Court concluded that, if the issue is a matter of degree, courts will disagree, and the English Court could legitimately differ from a decision of the EPO. In addition, the assessment of industrial applicability was necessarily a fact-dependent exercise, and the facts before the different tribunals may well differ. Whereas the English courts adopted an intense fact-finding process, this was not the case in the EPO, where there is generally no disclosure and no cross-examination of witnesses. The Court saw no reason for the higher level of scrutiny in the English system to defer to that of the EPO. If a decision is determined on the facts before them, the English courts may well reach a conclusion that differs from that of the EPO, even if the principles applied to those facts were the same.
In reviewing the case law of the EPO to determine those relevant principles, the Court held that the disclosed industrial applicability must be plausible and sufficiently precise so that it would not be enough to merely state that something has a use as a pharmaceutical without doing more to specify what that pharmaceutical use might be. Applying these principles to the facts, which included: that the inventors had no idea as to the activity of neutrokine-α; that it was hard to believe, on the basis of no experimental data, that neutrokine-α could treat such a diverse range of conditions; that the skilled person would have known TNF proteins were involved in immune regulation and an extensive range of diseases, but also that TNF proteins had a wide range of different actions, with there being no disease related to all TNF proteins; and that in reality, one was faced with having to pursue a research program to see which of the possible uses was real. Based on these facts, the Court of Appeal held that there was no disclosure of an industrial applicability which was both specific and plausible, and so upheld the ruling that the patent was invalid for lack of an industrial applicability.
Federal Circuit Affirms Summary Judgment
Ruling on Obviousness
Whitney D. Brown
The U.S. Court of Appeals for the Federal Circuit recently upheld a summary judgment ruling on obviousness of a patent covering a "piece of memorabilia item" attached to a trading card. Media Technology Licensing v. The Upper Deck Co., Case No. 09-1022 (Fed. Cir. Jan. 1, 2004) (Mayer, J.)(Rader, J. dissenting).
On summary judgment, the district court held that Media Technologies' patent was invalid for obviousness, based on an eclectic mix of prior art, including a trading card with a picture of Marilyn Monroe with a diamond attached, a piece of sheet reportedly slept on by one of the Beatles with letter of authenticity on hotel stationery, a greeting card with a piece of denim material belonging to James Dean attached and a piece of fabric purportedly belonging to a Capuchin Friar attached to paper stock including a picture of the friar.
Media Technologies maintained that a person of ordinary skill in the art would not apply the teachings of the Beatles and James Dean cards to a sports trading card, the item at issue in the case. Media Technologies further asserted that a person of ordinary skill would not have combined the references, or applied them to a sports card, based on an inability to predict that a trading card would convey memorabilia authenticity and that the trading card field containing a number of identified and unpredictable solutions. In a further attempt to demonstrate non-obviousness, Media Technologies argued that a "long felt but unsolved need" existed as well as unexpected results, in the form of commercial success. The district court found these arguments to be unavailing and granted Upper Deck Co.'s motion for summary judgment.
The Federal Circuit affirmed the district court's ruling, finding that, in view of evidence that consumer acceptance comes from the credibility already associated with the 90-year old trading card industry, Media Technologies had not shown that the combination of memorabilia with a conventional trading card resulted, or would result, in consumers accepting authenticity. In addition, the Court found that possible presentation and content characteristics of trading cards are not infinite, but are instead "limited by the cards' physical characteristics." Though some features, such as color, typefaces and layout, may be changed, the Court noted that these variables relate to presentation, not the content of the card, the subject of the asserted claims. The Court also rejected Media Technologies' claim for "unsolved need" and "unexpected results," maintaining that the need stated by Media Technologies did not match the asserted claims and that commercial success of the cards, attributable to "celebrity, not invention," could not satisfy the "unexpected results inquiry," even if unexpected.
In a vigorous dissent, Judge Rader noted that underneath the "blindness" to the underlying facts supporting non-obviousness shown in the Federal Circuit's ruling, a "bias against non-technical arts" existed. Judge Rader called the record in the case, "dubious at best," for establishing that a person with skill in the art would even think of combining the prior art references named above. Noting the Court's reliance on the defendants' expert witnesses in making this ruling, Judge Rader stated: "To rely on such expertise without considering the countervailing factual evidence on record contravenes the role of a court at the summary judgment stage and gives accused infringers a free pass to avoid a jury's judgment on the facts—in a sense, a get-out of-jail-free card (no pun intended)."
Applying the Egyptian Goddess
"Ordinary Observer" Test
Christopher L. May
In two separate cases, the U.S. Court of Appeals for the Federal Circuit overturned a ruling of the International Trade Commission and affirmed a ruling of a district court based on the "ordinary observer" test for design patent infringement. Crocs, Inc. v. U.S. International Trade Commission et al., Case No. 08-1596 (Fed. Cir. Feb. 24, 2010) (Rader, J.); Richardson v. Stanley Works, Case No. 09-1354 (Fed. Cir. Mar. 9, 2010) (Lourie, J.)
In Crocs, the U.S. International Trade Commission (ITC) found that Crocs' design patent for ornamental footwear was not infringed and that there was no domestic industry because Crocs did not practice the patented design. The Federal Circuit reversed, finding that the ITC, by focusing on the written description of the overall design, had improperly failed to consider if an "ordinary observer, familiar with the prior art designs, would be deceived into believing that the accused product is the same as the patented design." When the Court compared the accused design with the claimed design, it canceled that an ordinary observer would consider the two designs to be the same. For the same reason, the Court found that Crocs was itself practicing the patent because an ordinary observer would believe its product was the same as the patented design.
In Richardson, the Court, citing Crocs, found that the district court properly applied the ordinary observer test by removing the functional elements from the accused and claimed design before comparing the two and determining the tool in issue did not infringe. The Court noted that although claim construction is not useful in every design patent case, it is useful in connection with design patents that contain numerous functional elements, since such patents mandate a narrow construction. Applying such claim construction and removing the functional elements from the infringement analysis, the Court found that the overall effect of the accused tool was different than the overall effect of the claimed design and therefore did not infringe.
The Line Between an Ordinary Order and a
Preliminary Injunction
Philip Ou
In a recent decision, the U.S. Court of Appeals for the Federal Circuit found jurisdiction granted by 28 U.S.C. §1292 as interpreted by the federal courts and vacated a lower court's order of preliminary injunctive relief. Duhn Oil Tool, Inc. v. Cooper Cameron Corp., Case No. 09-1352 (Fed. Cir. Feb. 19, 2010) (per curiam, non-precedential) (Linn, J.; Friedman, J.; Moore, J.).
Plaintiff Duhn owns a patent covering a "frac mandrel," a tool for isolating the head of an oil or natural gas well. Cameron's version of the tool was alleged to infringe when its lockscrews are engaged during installation. Though the district court claimed to deny injunctive relief, it effectively granted it by imposing an affirmative obligation on Cameron to "provide instructions to its frac mandrel customers, which unambiguously state that the lockscrews are not to be engaged during installation or use of the frac mandrel."
The parties disputed whether the district court's order was could immediately be appealed under 28 U.S.C. §1292. Under Federal Circuit precedent, if a district court's order expressly grants an injunction, the order can be appealed under §1292(a)(1), without regard to whether the appellant is able to demonstrate serious or irreparable consequences. Applying this precedent, the Court found jurisdiction in viewing the district court's order as an express injunction. The Court focused on the lower court's requirement that Cameron provide installation instructions to its customers and classified that requirement as an injunction because it "specifically imposed ... an affirmative obligation on Cameron ... to prohibit Cameron from further allegedly infringing uses." The Court then reasoned that based on conflicting evidence regarding future infringement, an insufficient showing of the notice requirement and Duhn's failure to identify irreparable harm it would suffer without the court's order, there were insufficient grounds to grant an injunction. The Court relied on precedent in Amazon, which requires the moving party to show both likelihood of success on the merits and irreparable harm unless the injunction issues.
Practice Note: Although Duhn Oil is designated as non-precedential, the Court's application of Federal Circuit precedent to the appellate jurisdiction issue is compelling. A court's order denying injunctive relief should be scrutinized in case it is injunctive in nature and thus improper.
Old Secrets in the (Red) Light of the
Cockpit
Brian Park
Addressing the issue of just compensation under the Invention Secrecy Act, the U.S. Court of Appeals for the Federal Circuit reversed the Court of Federal Claims and held that Honeywell's patent at issue was valid and that Honeywell had standing to seek just compensation for pre-issuance use and post-issuance infringement of the patent by the United States. Honeywell Int'l, Inc., et al. v. United States, et al., Case No. 02-CV-1909 (Fed. Cir. Feb. 19, 2010) (Moore, J.) (Mayer, J. dissenting in part).
The patent-in-suit relates to passive night vision goggles (NVGs) that are compatible with a full-color display when both are used in an aircraft cockpit. Generally, NVGs function by amplifying available light, specifically light having relatively long wavelengths. A problem arises with the use of NVGs in aircraft cockpits because the cockpit displays often use red warning lights, a type of light that can overwhelm the NVG sensor and lead to disruption of vision through the NVGs. Prior art solutions involved eliminating or dimming red lights from cockpit displays. The government addressed the red-light problem by issuing an order that prohibited the use of red lights in NVG-compatible cockpits.
In 1985 Allied Corporation filed the application that matured into the patent in suit, the described invention was directed to a way of making NVGs compatible with red lights in aircraft cockpits. The invention employed a combination of filters, one of which allowed a narrow band of red light to pass, while another blocked all other ambient red light from reaching the NVG sensors. Together, these filters allowed the use of red lights in a cockpit display without disrupting the NVG sensors. Pursuant to the Invention Secrecy Act, a Naval Air Systems Command engineer reviewed the application and concluded that a secrecy order should be imposed. The secrecy order prevented the patent from issuing every year until 2000. By 2000, Allied Corporation merged with Honeywell to become Honeywell International . Consequently, Honeywell acquired ownership rights in the application. Honeywell later amended the claims of the application, which ultimately issued as the patent in suit.
After the patent issued, Honeywell filed a complaint in the Court of Federal Claims against the United States seeking just compensation under the Invention Secrecy Act for pre-issuance use of the invention and under 28 U.S.C. §1498 (a) for post-issuance infringement of certain claims that had been added to the application after the secrecy order had been lifted. The claims court held that the United States did infringe a claim of the patent, but that the patent was ultimately invalid. The claims court further held that Honeywell lacked standing under the Invention Secrecy Act to bring suit finding that, because of claim amendments and newly added claims, the patent in suit did not issue upon an application that was subject to a secrecy order pursuant to §181. Lastly, the claims court concluded that the "first sale doctrine" precluded Honeywell from recovering damages from the government for infringing on the patent because Honeywell manufactured and sold the NVGs at issue to the government. Honeywell appealed.
The Federal Circuit reversed, finding that the United States failed to meet its burden of proving that the patent was invalid. The Federal Circuit also reversed the claims court finding that Honeywell failed to establish a causal link between its injury and the United States' conduct. According to the Invention Secrecy Act, "[t]he owner of any patent issued upon an application that was subject to a secrecy order ... shall have the right, after the date of issuance of such patent to bring suit ... for just compensation for the damages caused by reason of the order of secrecy and/or use by the Government of the invention resulting from his disclosure." The claims court found that Honeywell's amendments to the application were so dramatic that there was no "contiguous relationship or dependence between" the application on which a secrecy order had been imposed and the issued patent. As such, the claims court determined that the patent did not issue "upon" the application and that there was no causal link between Honeywell's claimed harm and the secrecy order. The Federal Circuit rejected this "continuous relationship" test and noted that the Invention Secrecy Act explicitly allows for amendments made to an application. Therefore, because the patent in suit matured from the application that was subject to the secrecy order, Honeywell had standing to assert a claim for just compensation.
The Federal Circuit further rejected the claims court application of the first sale doctrine. Under the first sale doctrine, an inventor is precluded from seeking damages from the United States if an authorized first sale under the U.S. patent occurs prior to bringing the action. The claims court found that an authorized first sale occurred during Allied Corporation's ownership of the application, when Allied manufactured and sold the invention disclosed and claim in the application to the government. The Federal Circuit rejected this application of the first sale doctrine and stated that "the fact that Honeywell now owns the patent does not retroactively authorize the earlier sale." Accordingly, the first sale doctrine did not preclude Honeywell from recovering damages against the government for its infringing use of the patent.
In dissent, Judge Mayer asserted that when Allied Corporation and Honeywell merged to form Honeywell International, Allied Corporation's rights merged with Honeywell's rights. Therefore, in Judge Mayer's opinion the majority's ruling on the first sale doctrine unfairly allowed Honeywell to recoup the profits of the sale of products by its predecessor while simultaneously allowing Honeywell to sue the United States for infringing use of those sold product. Also, applying a forceful §112 written description argument, Judge Meyer would find that nothing in the original application supports the contention that Honeywell (or its predecessor) were in possession of the invention as ultimately claimed and that the trial court commented no error in finding that Honeywell was not harmed by the original secrecy order.
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