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Welcome to Winston & Strawn’s Federal Circuit Patent Decision Summaries. This newsletter provides a short summary of, and links to, the precedential patent cases decided by the Federal Circuit last month.
We hope that these Summaries are useful in keeping you updated on the Federal Circuit’s patent decisions. Questions can be directed to any of the contacts listed below. |
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The defendant TC Heartland, an Indiana company, requested the federal court in Delaware to dismiss a lawsuit filed against it in Delaware for lack of personal jurisdiction and venue or to transfer venue to Indiana—where TC Heartland was organized and headquartered. It argued that it was not registered to do business in Delaware, and only two percent of its products were shipped to the state. Thus, TC Heartland argued that the case should not be venued in Delaware because it did not “reside” in Delaware. However, the district court denied the motion holding that under 28 U.S.C. § 1391(c) a corporation resides for venue purposes anywhere it does business and is subject to personal jurisdiction. The district court relied on the Federal Circuit’s holding in VE Holding Corp. v. Johnson Gas Appliance Co. 917 F.2d 1574 (Fed. Cir. 1990), in which the court held that the special residency provision of § 1391(c) superseded the residency provision of 28 U.S.C. § 1400 which had been construed narrowly by the Supreme Court’s decision in Fourco Glass Ltd. v. Transmirra Products Corp., 353 U.S. 222 (1957). TC Heartland sought review, arguing that Congress’ 2011 amendment to the venue statutes nullified the Federal Circuit’s ruling in VE Holding.
The Federal Circuit disagreed and declined to order the case transferred to Indiana. The court rejected TC Heartlands’ arguments that Congress’ 2011 amendments to 28 U.S.C. § 1391 effectively overruled VE Holding’s determination that the definition of corporate residence in § 1391(c), applies to the patent venue statute, § 1400. Although Congress amended the language preceding the definition of corporate residence in § 1391 from, “For the purposes of venue under this chapter . . .” to “For all venue purposes,” the court held that the amendment broadened the definition of corporate residence, rather than narrowed it.
The Federal Circuit similarly rejected TC Heartlands’ argument that Congress’ 2011 amendment intended to overrule VE Holding because Congress added the introductory phrase, “except otherwise provided by law” to § 1391. TC Heartland contended that by this amendment Congress intended to codify federal common law concerning corporate “residency.” The Federal Circuit found, however, that there was no established Supreme Court common law that could have been codified by the 2011 amendment, and that numerous Congressional reports demonstrated Congress’ continued recognition that VE Holdings is the prevailing law.
For all of the foregoing reasons, the Federal Circuit held that, for venue purposes, a corporate defendant continues to “reside” in any jurisdiction where personal jurisdiction exists.
As to personal jurisdiction, the Federal Circuit reaffirmed its 1994 Beverly Hills Fan Co. v. Royal Sovereign Corp. decision, holding that personal jurisdiction exists if a non-resident defendant purposefully ships accused products into the forum through an established distribution channel and the cause of action for patent infringement is alleged to have arisen out of those activities. The Federal Circuit clarified, as in Beverly Hills Fan, that a forum state properly exercising jurisdiction could also hear claims for infringing acts occurring outside of the forum state. |
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| Written by Rich McCarty, Associate – Winston & Strawn LLP |
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The patent owner appealed the district court’s denial of a Rule 60(b)(3) motion for a new trial following a jury’s verdict that the plaintiff had failed to prove that the accused contact lenses were “soft” as required by the patent claim.
After trial, the plaintiff learned that the defendant’s expert had testified falsely and withheld test results and data analysis that would have undermined his opinions and trial testimony. The plaintiff moved for a new trial under Rule 60(b)(2) based on the newly discovered evidence and Rule 60(b)(3) based on the newly discovered fraud. The district court denied the motion holding that: (1) the plaintiff had not satisfied the Eleventh Circuit’s required showing that a new trial would probably produce a new result, (2) the defendant’s counsel was not complicit in the false testimony, and (3) the plaintiff was not prevented from fully and fairly presenting its case.
The Federal Circuit, applying Eleventh Circuit law, reversed and remanded for a new trial under Rule 60(b)(3), finding that the district court had abused its discretion in denying the plaintiff’s motion. The testimony of defendant’s expert on a central infringement issue at trial concealed the expert’s knowledge of test results on third party products previously found to infringe which contradicted his conclusions with respect to the accused products. The plaintiff was not required to prove that the withheld testing would have necessarily affected the outcome of the case. Instead, the plaintiff only needed to show that timely production would have made a difference in the way the plaintiff’s counsel approached the case or prepared for trial. The district court also erred in requiring proof that the defendant or its counsel was complicit in the expert’s false testimony. The Federal Circuit did not address whether the district court abused its discretion in denying a new trial under Rule 60(b)(2). |
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| Written by Sarah Kalemeris, Associate – Winston & Strawn LLP |
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In Merck & Cie v. Gnosis S.P.A. (Gnosis I), the petitioner filed a petition for rehearing en banc of a panel decision affirming the result in an inter partes review (IPR) before the Patent Trial and Appeal Board (PTAB). The PTAB held that the contested claims of the patent-in-suit were obvious. Merck urged the court to sit en banc to decide whether “clear error” was the applicable standard for reviewing the PTAB’s results or whether “substantial evidence” standard used by the panel was appropriate. The petition for rehearing en banc was denied.
Judges O’Malley, Wallach, and Stoll separately concurred. While acknowledging that the “substantial evidence” standard is seemingly inconsistent with the America Invents Act (AIA) insofar as that statute purported to establish IPRs as a “replacement” for district court proceedings, the concurrence noted that the court was bound by Dickinson v. Zurko. In Dickinson, the Supreme Court concluded that 5 U.S.C. § 706 (which provides that “substantial evidence” review is afforded to agency fact finding) applies to PTAB findings. The concurring judges further noted that absent action by Congress or by the Supreme Court, the seeming inconsistency the intent of the AIA, and the holding in Dickinson was not within its power to cure.
Writing in dissent, Judge Newman noted that because the entire thrust of the AIA is that PTAB proceedings would be an alternative to district court proceedings, and, as such, the highly deferential “clear error” standard of review that would be applicable to district court fact finding should likewise apply to the review of IPR fact finding. As such, she concluded that en banc action is needed to realign the Federal Circuit’s standard of review with the legislative purpose of the AIA.
In South Alabama Medical Science Foundation v. Gnosis (Gnosis II), a companion appeal to Gnosis I, the petitioner similarly sought “en banc rehearing for the same reasons addressed” by Merck & Cie in its petition for hearing. Judges O’Malley, Wallach, and Stoll concurred in the denial of rehearing en banc, while Judge Newman dissented for the same reasons discussed in her dissent to the denial of the en banc rehearing in Gnosis I. |
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| Written by Prachi Mehta, Associate – Winston & Strawn LLP |
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The petitioner filed for inter partes review (IPR) of certain claims of the patent-in-suit, asserting that the contested claims were invalid as anticipated and obvious. The Patent Trial and Appeal Board (PTAB) instituted a review of the challenged claims on several anticipation grounds, but pursuant to 37 C.F.R.§ 42.108(a), declined on the basis of redundancy to institute a review based on other grounds, including the obviousness ground. After the PTAB found one of the challenged claims to be not anticipated, the petitioner appealed both the finding of no anticipation and the PTAB’s refusal to institute a review on the basis of redundancy. The Federal Circuit affirmed.
The Federal Circuit held that it lacked jurisdiction to review the PTAB’s refusal to institute a review on the obviousness ground in light of its determination that the obviousness ground was redundant in view of the instituted anticipation grounds. Adhering to prior rulings, the Federal Circuit refused to adopt a “crabbed” reading of the appeal bar in 35 U.S.C. § 314(d) that would permit appeal of the redundancy determination. The Federal Circuit explained, citing Harmonic Inc. v. Avid Tech., Inc., that because the redundancy determination was a combination of non-appealable decisions to institute on the anticipation grounds, and non-appealable decisions not to institute on the redundant obviousness grounds, the refusal to institute was non-appealable.
The Federal Circuit also held that the appeal bar extended to the petitioner’s attempt to utilize the Administrative Procedure Act (APA), to challenge the PTAB’s allegedly deficient explanation of the redundancy determination. The Federal Circuit explained that Congress’ “specific statutory language” in 35 U.S.C. § 314(d) bars appeal of the PTAB’s institution and non-institution decisions, and overcomes the “strong presumption” of judicial review of agency action under the APA. |
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| Written by Lowell Jacobson, Associate – Winston & Strawn LLP |
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The patentee sued for infringement of a patent related to methods of analyzing sequences of DNA within an individual’s genome. Specifically, the patentee discovered a feature of genomic DNA called “linkage disequilibrium,” meaning that the coding regions (i.e., DNA that is ultimately expressed into protein) and non-coding regions (which do not code for protein) appear “linked” together in individuals’ genomes more often than probability would dictate.
The district court granted the patentees’ motion to dismiss, holding that the claims of the patent covered ineligible subject matter under 35 U.S.C. § 101, because they claimed a law of nature. The Federal Circuit affirmed, applying the two-step Alice test for patent eligibility under § 101, which “distinguish[es] patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts.”
First, the court found that the patent claim “is directed to a natural law—the principle that certain non-coding and coding sequences are in linkage disequilibrium with one another.” Second, the court held that the patent claim was not directed to any inventive concept. For instance, it involved no creation or alteration of DNA sequences, and did not purport to identify novel detection techniques. Rather, the claimed method simply applied well-known “amplifying” and “analyzing” steps to examine the non-coding DNA regions as a surrogate marker for the coding regions. The court rejected the patentability of this “mental process” step, whose purported novelty resided in the newly discovered natural law of linkage disequilibrium between coding and non-coding regions. |
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| Written by Bryce Cooper, Associate – Winston & Strawn LLP |
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A third party sought ex parte reexamination of a patent relating to a remote control device. The examiner rejected some of the claims as being anticipated and obvious, and the Patent Trial and Appeal Board (PTAB) affirmed.
Specifically, at issue was proper construction of the terms “adapted to be held by the human hand” and “thumb switch.” The PTAB agreed with the examiner that the terms should be read broadly such that: 1) “adapted to be held by the human hand” included various forms of grasping by the human hand; and 2) “thumb switch” meant a switch merely capable of being enabled/activated by the human thumb but not excluding activation by another digit. The PTAB noted that the specification did not preclude such a broad interpretation.
The Federal Circuit affirmed-in-part, reversed-in-part, vacated-in-part, and remanded. As to the issue of claim construction, the court reiterated that in reexamination, claims must be given their broadest reasonable interpretation in light of the specification. Because of the specification’s “clear teaching that the patentee intended a narrower meaning,” the PTAB’s broad construction of the terms was unreasonable. The court adopted a narrower interpretation, so that: 1) “adapted to be held by the human hand” meant “designed or made to be held by the human hand;” and 2) “thumb switch” meant “made or designed for activation by a human thumb.”
Therefore, the Federal Circuit reversed the PTAB’s anticipation rejection given that it was not supported under the proper claim constructions. The court did find, however, that the PTAB’s factual findings underlying its obviousness rejection were supported by substantial evidence, and vacated and remanded for a determination as to whether the claims would be obvious under the correct claim constructions. |
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| Written by Sharon Lin, Associate – Winston & Strawn LLP |
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The patentee claimed infringement of its design patent for a personal flotation device. The parties stipulated to a judgment based on the court’s claim construction. On appeal, the Federal Circuit rejected the court’s claim construction, vacated the stipulated judgment, and remanded.
The patentee’s design patent was directed to a personal flotation device with two arm bands connected to a torso piece. Notably, the claimed torso piece is flat on its back and tapers toward a connecting strap on its sides. The accused product’s torso piece, however, was not tapered—it had two straps that extended up to form a vest. The district court found the patent’s arm bands and tapered torso functional, and thus eliminated those elements from its construction of the design patent claim.
After applying the PHG Technologies factors for functional design,the Federal Circuit agreed with the court that the tapered torso and armbands were functional and that it is appropriate to distinguish between functional and ornamental features when interpreting a design claim. The Federal Circuit did not agree with the court’s wholesale elimination of the functional elements of the claim, however, holding that the court erred in separating out and eliminating those features because “design patents protect the overall ornamentation of a design, not an aggregation of separable elements.” On remand, the Federal Circuit instructed that the court should focus on the “elements [that] contribute to the design’s overall ornamentation” but conceded that, because of the functional elements and minimal ornamentation, the patentee’s design claim was “narrow.” |
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| Written by Ryan Hauer, Associate – Winston & Strawn LLP |
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Winston & Strawn Contacts |
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| David Enzminger |
Co-Chair, Intellectual Property Practice
SV: +1 (650) 858-6580
L.A.: +1 (213) 615-1780
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