Recently in Supreme Court Category

District Court Denies Section 101 Challenge to Patent Validity Where Claims Described a Specialized System

June 3, 2015

Defendant Murphy USA Inc. ("Murphy") filed a motion for summary judgment of invalidity as to certain claim U.S. Patent No. 6,076,071 ("the '071 Patent") and one claim of U.S. Patent No. 6,513,016 ("the '016 Patent") on the grounds that the patents are directed to non-patentable subject matter under 35 U.S.C § 101. In its motion, Murphy contended that "[t]he Asserted Claims, directed to an 'automated product pricing system,' cover nothing more than the abstract idea of changing prices from a central location using known electronic components, and are not patent-eligible under § 101." Murphy also presented a chart of one of the claims to demonstrate why each discrete claimed "principle" is purportedly accomplished in a conventional manner.

The district court began its analysis by noting that"[p]atent claims enjoy a presumption of validity. 35 U.S.C. § 282. Beyond listing the claimed elements in a column entitled 'Abstract Commercial Principle,' Defendant has failed to articulate convincingly why it believes the 'automated product pricing system' of the Asserted Claims is considered abstract under the law. By evaluating Claim 24 of the '071 Patent as a whole, the court concludes the Asserted Claims are not abstract under the law."

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Supreme Court's Decision in Teva Does Not Require Federal Circuit to Review Immaterial or Improper Fact-Finding under a Clear Error Standard

June 1, 2015

After an appeal to the Federal Circuit, Defendant Arthrex, Inc. ("Arthrex") filed a motion to reopen the judgment under FRCP 60(b). Arthrex premised its motion on the argument that the judgment should be reopened in light of the Supreme Court's recent holding in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., 135 S.Ct. 831 (2015).

Plaintiffs Smith & Nephew, Inc. and John Hayhurst (collectively "S&N") had appealed the district court's decision to grant Arthrex's motion for judgment as a matter of law. As set forth by the district court, under the case law in effect at the time of the appellate decision, the Federal Circuit reviewed all aspects of the district court's claim construction de novo. The Federal Circuit ultimately reversed the decision granting Arthrex's motion for judgment as a matter of law.

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District Court Grants Motion to Reconsider Summary Judgment Motion after Supreme Court's Decision in Limelight v. Akamai

August 20, 2014

In this patent infringement action, FedEx moved for reconsideration after the district court had denied its motion for summary judgment regarding the plaintiff's claim for inducing patent infringement. FedEx moved for reconsideration based on the Supreme Court's recent decision in Limelight Networks, Inc. v. Akamai Technologies, Inc., 134 S. Ct. 2111 (2014).

The district court first analyzed whether the motion to reconsider was procedurally proper. "Under Local Rule 7-18, a motion for reconsideration may be made on the following grounds only:

(a) a material difference in fact or law from that presented to the Court before such decision that in the exercise of reasonable diligence could not have been known to the party moving for reconsideration at the time of such decision, or (b) the emergence of new material facts or a change of law occurring after the time of such decision, or (c) a manifest showing of a failure to consider material facts presented to the Court before such decision. No motion for reconsideration shall in any manner repeat any oral or written argument made in support of or in opposition to the original motion."

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Supreme Court's Decision on Indefiniteness Constitutes Basis to Reconsider Prior Claim Construction Order But Does Not Result in Change of the Claim Construction

July 23, 2014

In this patent infringement action, Defendant Lighthouse Photonics Corporation's ("Lighthouse") moved to reconsider the Court's Claim Construction Order. Lighthouse argued three reasons for reconsideration: "first, Newport withheld discovery regarding its relevant prior art patents; second, a recent Supreme Court decision constitutes an intervening change in the law; and third, the Court adopted a construction that had not been advanced by either party until the reply briefing."

The district court, turning to the first basis for the motion to reconsider, stated: "There has been no shortage of sniping and finger-pointing in this case, and the briefing on this Motion is no exception. The parties vigorously dispute whether Newport withheld discovery regarding its prior art patents: No. 4,756,003 ("'003 Patent") and No. 5,410,559 ("'559 Patent"). The Court finds no need to wade into the quagmire over who withheld what, because it exercises its "inherent jurisdiction to modify, alter, or revoke" interlocutory decisions. See Martin, 226 F.3d at 1048-49. Specifically, the Court finds that the presentation of two related patents, which were allegedly withheld by Newport, constitutes good cause to reconsider the May 7, 2014 claim construction order."

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Supreme Court's Indefiniteness Ruling Has Immediate Impact at ITC

June 16, 2014

After a hearing in an Investigation occurred between February 24 and March 7, 2014 and with the parties having submitted their opening post-hearing briefs on March 21, 2014 and their reply post-hearing briefs on March 28, 2014, the Administrative Law Judge determined that supplemental briefing was necessary after the Supreme Court's decision in Nautilus v. Biosig.

Noting that the final initial determination on violation in the Investigation was currently due to be issued no later than June 20, 2013, the Administrative Law Judge pointed out that "among the material issues involved in this investigation is whether certain claims of the asserted patents are indefinite under 35 U.S.0 § 112."

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Supreme Court Sets Forth New Standard for Indefiniteness, Requiring Greater Precision in Claim Terms than the Standard Long Used by Federal Circuit

June 3, 2014

For over a decade, to show that a claim term is invalid as indefinite under 35 U.S.C. §112, ¶2, the Federal Circuit has required that such terms be "not amenable to construction" or "insolubly ambiguous." The Supreme Court in Nautilus, Inc. v. Biosig Instruments, Inc. has rejected that standard on the grounds that it tolerates too much imprecision. Under the new standard, a claim term is indefinite if it, instead, fails to define "the scope of the invention with reasonable certainty."

The patent at issue, assigned to Biosig Instruments, Inc. ("Biosig"), involves a heart-rate monitor used with exercise equipment. Prior heart-rate monitors, the patent asserts, were often inaccurate in measuring the electrical signals accompanying each heartbeat (electrocardiograph or ECG signals) because of the presence of other electrical signals (electromyogram or EMG signals) generated by the user's skeletal muscles. The invention claims to improve on prior art by detecting and processing ECG signals in a way that filters out the EMG interference.

Claim 1 of the patent, which contains the limitations critical to the case, recites a "heart rate monitor for use by a user in association with exercise apparatus and/or exercise procedures." The claim comprises, among other elements, a cylindrical bar with a "live" electrode and a "common" electrode "mounted . . . in spaced relationship with each other." Biosig filed the underlying patent infringement suit, alleging that Nautilus, Inc. ("Nautilus") infringed on its patented claims by selling exercise machines containing Biosig's patented technology.

After conducting a claim construction hearing, the district court granted Nautilus's motion for summary judgment on the ground that the claim term "in spaced relationship with each other" failed the definiteness requirement. The Federal Circuit reversed and remanded, concluding that a patent claim passes the §112, ¶2 threshold so long as the claim is "amenable to construction," and the claim, as construed, is not "insolubly ambiguous." Under that standard, the court determined, the '753 patent survived indefiniteness review.

The Supreme Court disagreed and rejected the Federal Circuit's test for indefiniteness. According to the Supreme Court, a proper reading of §112, ¶2 requires that a patent be held invalid for indefiniteness if its claims, read in light of the patent's specification and prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention.

The Court began its analysis by setting forth the aspects of the §112, ¶2 inquiry on which all parties agreed. The parties agreed that definiteness is to be evaluated from the perspective of a person skilled in the relevant art, that claims are to be read in light of the patent's specification and prosecution history, and that definiteness is to be measured as of the time of the patent application.

The parties disagreed, however, as to how much imprecision §112, ¶2 tolerates. That issue, the Court admitted, is a delicate one. According to the Court, the definiteness requirement must take into account the inherent limitations of language. On the one hand, some modicum of uncertainty is the "price of ensuring the appropriate incentives for innovation." On the other hand, a patent must be precise enough to afford clear notice of what is claimed, thereby apprising the public of what is still open to them in a manner that avoids a "zone of uncertainty which enterprise and experimentation may enter only at the risk of infringement claims." In the Court's view, the standard adopted by the Court mandates clarity, while recognizing that absolute precision is unattainable.

The Federal Circuit's standard, on the other hand, lacks the precision §112, ¶2 demands. To tolerate imprecision just short of that rendering a claim "insolubly ambiguous" would diminish the definiteness requirement's public-notice function and foster the innovation-discouraging "zone of uncertainty." More specifically, the expressions "insolubly ambiguous" and "amenable to construction," which permeate the Federal Circuit's recent decisions concerning §112, ¶2, can leave courts and the patent bar at sea without a reliable compass. While some of the Federal Circuit's fuller explications of the term "insolubly ambiguous" may come closer to tracking the statutory prescription, the Court held that it must set forth the correct standard to ensure that the Federal Circuit's test is at least "probative of the essential inquiry."

Supreme Court Changes the Rules for Induced Infringement

June 3, 2014

In the long-awaited decision in Limelight Networks, Inc. v. Akamai Techs., Inc., the Supreme Court once again reversed the Federal Circuit. This time, the Court's reversal involved the issue of indirect infringement. Specifically, the Court held that an accused infringer cannot be liable for inducing infringement under §271(b) where no one has directly infringed under §271(a) or any other statutory provision.

By way of background, Akamai Technologies, Inc., ("Akamai") is the exclusive licensee of a patent that claims a method of delivering electronic data using a content delivery network ("CDN"). Limelight Networks, Inc., ("Limelight") also operates a CDN and carries out several of the claimed steps in the patent. But, its customers, rather than Limelight itself, perform a claimed step of the patent known as "tagging."

Under Federal Circuit case law, most recently refined in Miniauction, Inc. v. Thomson Corp., liability for direct infringement of a method patent requires performance of all steps to be attributable to a single party. The District Court concluded that Limelight could not have directly infringed the patent at issue because performance of the "tagging" step could not be attributed to Limelight. In an en banc decision, the Federal Circuit reversed, holding that a defendant who performed some steps of a method patent and encouraged others to perform the rest could be liable for inducement of infringement even if no single entity was liable for direct infringement.

The Supreme Court disagreed. The Court began its analysis by setting forth what it called "a simple truth"--liability for inducement must be predicated on direct infringement. The court then held that, assuming the Federal Circuit's holding in Miniauction is correct, Akamai's claimed method has not been infringed because the performance of all of its steps is not attributable to any one person. And because direct infringement has not occurred, there can be no inducement of infringement under §271(b).

In the Court's view, the Federal Circuit's view would deprive §271(b) of ascertainable standards and require the courts to develop two parallel bodies of infringement law: one for direct infringement and another for indirect infringement. Further, the Court's reading of §271(b) was reinforced by §271(f)(1), which, in the Court's opinion, illustrates that Congress knows how to impose inducement liability predicated on noninfringing conduct when it wishes to do so.

In rejecting Akamai's arguments, the Court held that although a would-be infringer could evade liability by dividing performance of a method patent's steps with another whose conduct cannot be attributed to the defendant, that merely would be a result of the Federal Circuit's interpretation of §271(a). Moreover, a desire to avoid this consequence does not justify fundamentally altering the rules of inducement liability expressly required by the text of the Patent Act.

The Court concluded its decision by expressly stating a point that was obviously implied in its analysis: it will not determine whether the rule in Miniauction is correct. That is because the question presented here is clearly focused on §271(b) and presupposes that Limelight has not committed direct infringement under §271(a). The Court did say, however, that the Federal Circuit is free to revisit the Miniauction rule on remand.

Whether the Federal Circuit will now change its holding in Miniauction is the subject of debate. While many in the patent bar believe it should be reversed, those that do not think it will be (at least not any time soon) can rely on a few points for support. First, several Federal Circuit judges, including Judges Linn, Dyk, Prost, O'Malley, and Plager, have arguably endorsed the Miniauction holding in various opinions they have authored or joined over the years. Second, the rule in Miniauction and other, similar decisions has stood for several years without any real hint by Congress that it disapproves of the rule or plans to change it.

In the meantime, what seems certain is that litigants will have to consider the Court's ruling when developing, or attacking, infringement theories. Also, patentees likely will want to consider the ruling when drafting claims that may involve direct infringement by more than one actor.

Supreme Court Rules That Patent Owner Always Bears the Burden of Proof on Patent Infringement

January 27, 2014

In a nine to zero decision authored by Justice Breyer, the United States Supreme Court reversed a decision of the Federal Circuit and held that when a licensee seeks a declaratory judgment against a patentee that the licensee's products do not infringe the licensed patent(s), the patentee bears the burden of persuasion on the issue of infringement.

Petitioner Medtronic, Inc., ("Medtronic") designs, makes, and sells medical devices. Respondent Mirowski Family Ventures, LLC, ("Mirowski") owns patents relating to implantable heart stimulators. In 1991, Medtronic and Mirowski entered into a patent-license agreement that allows Medtronic to practice several Mirowski patents in exchange for royalty payments. In 2007, pursuant to terms of the agreement, Mirowski notified Medtronic that it believed several newly released Medtronic products infringed the licensed patents and, therefore, Medtronic owed additional royalties. Medtronic disagreed and challenged Mirowski's infringement claim in a declaratory judgment action. The District Court (for the District of Delaware) concluded that Mirowski, as the party asserting infringement, bore the burden of proving infringement and that Mirowski had not met that burden. Mirowski appealed to the Federal Circuit.

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Will Mayo v. Prometheus Be the Basis for the Invalidation of Broad Patent Claims and the Renegotiation of Royalties? Implications for Myriad gene case.

March 22, 2012

In Mayo v. Prometheus, the U.S. Supreme Court held that claims directed to a diagnostic method were unpatentable, not simply because the subject matter of the claims was not novel or obvious, but rather because the subject matter covered by the claims was the mere application of the laws of nature - the discovery of facts of nature - and therefore not patentable on a more fundamental basis under Section 101 of the Patent Act.

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Federal Circuit Confirms That Method of Deferring Taxes Is Not Patentable

March 8, 2012

Defendant American Master Lease LLC ("AML") appealed the decision of Judge Guilford of the Central District of California holding that all claims of U.S. Patent No. 6, 292,788 were invalid for failing to meet the subject matter eligibility requirements of Section 101 of the Patent Statute. The Federal Circuit (in a panel consisting of Circuit Judges Prost, Schall and Moore) affirmed the invalidity of the claims based on the district court's pre-In re Bilski application of the machine or transformation test.

The claims at issue relate to an investment tool to enable property owners to buy and sell property without incurring tax liability pursuant to 26 U.S.C. § 1031 ("1031 Exchange"). All claims in the '788 patent are method claims, with claim 1 being representative:

1. A method of creating a real estate investment instrument adapted for performing tax-deferred exchanges comprising:

aggregating real property to form a real estate portfolio;

encumbering the property in the real estate portfolio with a master agreement; and

creating a plurality of deedshares by dividing title in the real estate portfolio into a plurality of tenant-in-common deeds of at least one predetermined denomination, each of the plurality of deedshares subject to a provision in the master agreement for reaggregating the plurality of tenant-in-common deeds after a specified interval.

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Complaint Survives Motion to Dismiss Based on Facts Outside the Complaint

December 8, 2011

In a patent case filed in the Eastern District of Wisconsin by Illinois Tool Works ("ITW") against Elektromanufaktur Zangenstein Hanauer GmbH & Co. KGaA ("EMZ"), EMZ moved to dismiss for failure to state a claim under Rule 12(b)(6) as well as for lack of personal jurisdiction under Rule 12(b)(2). EMZ alternatively moved for a more definite statement under Rule 12(e).

EMZ's motion to dismiss for failure to state a claim rested on its assertion that ITW's failure to identify an accused product in the complaint rendered ITW's infringement claims ambiguous and conclusory. Specifically, EMZ argued that "the complaint's reference to unspecified and generically-labeled 'latching mechanisms' as the allegedly infringing product is not sufficient to provide EMZ fair or adequate notice as to what ITW's claim of infringement is and the grounds upon which it rests." In response, ITW argued that the complaint was sufficient because it alleged that the infringing products "are latching mechanisms for washing machines sold to manufacturers, such as Whirlpool, that EMZ knew were bound for the United States."

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Review Your Assignment Agreements Now -- United States Supreme Court Re-Affirms that Inventors Own Their Inventions

July 13, 2011

In a much anticipated decision, the United States Supreme Court confirmed that, absent a valid assignment agreement, inventors own their invention -- even if federal funding was used to support the research efforts. The decision in Leland Stanford Junior Univeristy v. Roche Molecular Systems, Inc. held that under the Patent Act an inventors owns his or her invention in the first instance and only a valid and binding assignment agreement is effective to transfer ownership from the inventor.

The decision let stand the Federal Circuit's ruling that Stanford University did not obtain the patent rights from one of its research scientists when it used an assignment agreement stating that the research scientist "agrees to assign" all of his future inventions. Rather, Roche obtained the rights in a subsequent agreement because it used the language "do hereby assign." The Federal Circuit has now held on a number of occasions that the language "agree to assign" is a mere promise to assign in the future and requires a subsequent act, while the language "do hereby assign" is effective immediately upon the creation of the future invention without any additional act on the part of the assignee.

The Supreme Court held that the Bayh-Dole act for funding did not change this result as it did not contain any language to trump the Patent Act, which makes clear that an inventor owns the invention unless there is a valid assignment to the contrary. The Supreme Court noted that the Federal Circuit's decision on the distinction between "agree to assign" and "do hereby assign" was not before it as Stanford University did not file its cert petition on that basis. Accordingly, the Supreme Court did not address this issue and let stand the Federal Circuit's decision, although it did leave open the possibility of addressing this issue in the future.

As a result, the Federal Circuit's decision on "agree to assign" stands and companies should immediately review their assignment agreements to determine if they have used the "agree to assign" language. If the "agree to assign" language was used in the past it should be changed immediately to the more favored "do hereby assign" and action should be taken immediately to remedy the problems that may have been created from the "agree to assign" language. Otherwise, the company may lose inventions that it believed it owned.

Please click on the link for a more detailed discussion of the Roche case.

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The authors of www.PatentLawyerBlog.com are patent litigation lawyers at Jeffer Mangels Butler & Mitchell LLP. We represent inventors, patent owners and technology companies in patent licensing and litigation. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.

Microsoft Loses Clear and Convincing Evidence Challenge to Validity of Patents

June 13, 2011

The United States Supreme Court affirmed the use of the clear and convincing evidence standard for challenges to the validity of patents last week in a closely watched and eagerly anticipated case, i4i v. Microsoft. The Supreme Court's opinion re-affirmed decades of case law that the standard to challenge the validity of a patent is clear and convincing evidence rather than the preponderance of the evidence standard urged by Microsoft.

The patent held by i4i claimed an improved method for editing computer documents. The patent was asserted against Microsoft Word and Microsoft countered that the patents were invalid and challenged the standard for determining the validity of a patent, arguing that it should be by a preponderance of the evidence rather than the existing clear and convincing standard currently used in patent cases.

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