Articles Posted in Federal Circuit

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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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The parties filed cross-motions for summary on the issue of inequitable conduct. The district court had previously denied summary judgment motions on the issue of inequitable conduct but that was prior to the Federal Circuit’s decision in Therasense, Inc. v. Becton Dickinson and Co., 649 F.3d 1276 (Fed. Circ. 2011) (en banc). The district court granted the parties request to re-brief the issue in light of Therasense.

The plaintiff asserted on its renewed summary judgment motion that there was insufficient evidence of specific intent to deceive the Patent and Trademark Office (“PTO”). The defendant did not dispute that there was no direct evidence of specific intent in the case. Instead, the defendant relied on circumstantial evidence, arguing that the only logical inference from the evidence is one of intent to deceive the PTO. To make this argument, the defendant relied on the fact that two of the inventors knew of two significant references and failed to disclose them to the PTO. The district court noted, relying on Therasense, that “[p]roving that the applicant knew of a reference, should have known of its materiality, and decided not to submit it to the PTO does not prove specific intent to deceive.” 649 F.3d at 1290. Based on this quote from Therasense, the district court concluded that the mere fact that the inventors failed to disclose these references was insufficient to defeat summary judgment in favor of the plaintiff.
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Pfizer filed a patent infringement action against Teva Pharmaceuticals (“Teva”) over a patent that claims the use of certain chemical compounds claimed as a method to treat erectile dysfunction. During the case, Teva filed a motion to amend its answer and counterclaims to alleged a defense and counterclaim for inequitable conduct. The district court granted the motion, but noted that it was a close case.

Several months later, Teva moved to amend its answer and counterclaim to change its allegations supporting the inequitable conduct claim. The district court denied the requested amendment on the ground of prejudice and futility because the amendment was late and would prejudice Pfizer and the individuals named in the proposed amendment and because the amendment failed to make any plausible showing of but-for materiality.
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Plaintiff, Innova Patent Licensing, LLC (“Innova”) filed a patent infringement action against Alcatel-Lucent Holdings (“Alcatel”) for a patent claiming methods for using a mail processing program to scan electronic messages to obtain additional information. Alcatel challenged the patent on the ground that it did not claim eligible subject matter under 35 U.S.C. § 101 and moved to dismiss.

The court stated that “[u]nder the patent laws, certain broad categories of subject matter are eligible for patent protection,” and cited the language from Section 101 (” Whoever invents or discovers any new and useful process, machine, manufacture or composition of matter, or a new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title”) and the United States Supreme Court’s decision in Bilski v. Kappos, 130 S. Ct. 3218, 3225 (2010) (“in choosing such expansive terms modified by the comprehensive ‘any,’ Congress plainly contemplated that the patent laws would be given wide scope”).
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Plaintiff AlmondNet, Inc. filed a patent infringement action against Microsoft Corporation based on four patents pertaining to Internet advertising. Microsoft filed several affirmative defenses and counterclaims against AlmondNet, including a defense and counterclaim that AlmondNet engaged in inequitable conduct before the PTO by failing to disclose three articles related to Internet advertising and three existing Internet advertising systems. AlmondNet moved to dismiss the inequitable conduct counterclaim and the district court granted the motion with leave to amend to plead inequitable conduct with particularity.

Microsoft subsequently amended its answer and counterclaim and AlmondNet moved to strike the inequitable conduct defense and to dismiss Microsoft’s counterclaim for inequitable conduct. The district court determined that Microsoft’s amended pleading was sufficient and denied the motion.
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TiVo filed a patent infringement action against Verizon and Verizon counterclaimed alleging that TiVo infringed six of its patents. TiVo raised inequitable conduct counterclaims against certain of the Verizon patents. Verizon filed a motion to dismiss, which the district court granted under the principles set forth in Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312 (Fed. Cir. 2009), but permitted TiVo to amend its pleading. TiVo amended its pleadings and Verizon renewed its motion to dismiss.

The district court began its analysis by noting that the Federal Circuit’s decision in Therasense, Inc. v. Becton, Dickinson and Company, 2011 WL 2028255 (Fed. Cir. May 25, 2011) was decided after the parties had completed their briefing on the motion. Although Therasense changed the standard for proving inequitable conduct, the district court stated that Thereasense did not address the pleading standard because it was decided based on the review of a bench trial. Accordingly, Exergen remains the leading authority on the pleading standard for inequitable conduct. “Exergen held that for ‘pleading inequitable conduct in patent cases, Rule 9(b) requires identification of the specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO.'”
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Plaintiff filed a patent infringement action against the defendant alleging that certain of defendant’s T-shirt transfer products infringed plaintiff’s patent. Defendant filed an answer and counterclaim which accused the plaintiff of inequitable conduct in amending its patent during a reissuance of the patent. Defendant claimed that plaintiff deliberately pursued a broadened reissue patent based on her learning of material faults in the patent after having had an opportunity to analyze defendant’s products and technology. Defendant’s primary contention was that the amendments made during the reissuance proceeding added new material to the patent.

As the district court wrote, “[a] reissue patent that enlarges the scope of the claims contained in an original patent shall not be granted unless it is applied for within two years of the grant of the original patent.” The reissue application for the patent-in-suit was filed more than two years after the issuance of the patent. Plaintiff moved to dismiss the inequitable conduct defense on the grounds that the facts alleged did not support a plausible inference that the plaintiff (1) made an affirmative misrepresentation of material fact or failed to disclose material information to the PTO during the reissue examination and (2) intended to deceive the PTO.
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Mean-plus-function limitations in patent claims require special construction and can result in narrow patent claims that may not be beneficial to patent owners. As a result, many potential infringers will try to take advantage by claiming that certain terms in patent claims are in reality means-plus-function claims. The determination of whether certain terms in a patent are means-plus-function claims can have an important impact on the validity of the patent.

The Federal Circuit’s recent decision in a case involving patents pertaining to elevator systems highlights the importance of whether a claim limitation is considered a means-plus-function term. In Inventio AG v. Thyssenkrupp Elevator Americas Corp., Case No. 2010-1525 (Fed. Cir. June 15, 2011), this distinction played a key role.
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After the Federal Circuit’s decision in Thereasense, Inc. v. Becton, Dickinson and Co., 2011 WL 2028255 (Fed. Cir. 2011), it appeared likely that it would be difficult, if not impossible, to proceed on an inequitable conduct claim. A recent decision from the United States District Court for the District of New Jersey may change that trend.

Schering Corp. (“Schering”) filed a complaint alleging that Mylan Pharmaceuticals’ (“Mylan”) Abbreviated New Drug Application (“ANDA”) infringed two of Schering’s patents that disclosed different ways to reduce cholesterol levels. Schering filed motions for partial summary judgment, one of which sought to eliminate Mylan’s defense of inequitable conduct in light of Thereasense. After granting Schering’s motion for summary judgment on the issue of infringement, the district court examined the motion addressing the inequitable conduct defense.
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The Federal Circuit’s en banc decision in Therasense v. Becton, Dickinson & Co., is having its intended effect of reigning in inequitable conduct claims. In a recent decision, Judge Otero of the United States District Court for the Central District of California granted summary judgment of no unenforceability on defendant’s inequitable conduct claim. Plaintiff U.S. Rubber Recycling, Inc. filed suit alleging, among other things, that Defendant Ecore International, Inc. fraudulently procured and wrongfully enforced its patent relating to rubber acoustical underlayment (insulating material for use with floor tile) in order to monopolize the market for such products. Specifically, the Plaintiff asserted that, “during the prosecution of the [patent], Defendant intentionally failed to disclose to the PTO material prior art that showed the claimed invention had been sold in the United States and described in printed publications more than one year prior to the [patent] application.” In its summary judgment motion, the Defendant alleges “that the issuance of the reissue patent demonstrates that the alleged prior art are not material as a matter of law” and that the “Plaintiff cannot raise an issue of genuine fact that the Defendant failed to disclose any reference with bad intent.”
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