Cislo & Thomas IP Blog

On December 2, 2011, the Federal Circuit issued a writ of mandamus ordering the transfer of a patent case – although, this time the writ was not issued to the Eastern District of Texas, but the District of Delaware, another venue favored by plaintiffs in patent cases.

In In re Link_A_ Media Devices Corp., the Federal Circuit repudiated Judge Sue L. Robinson’s denial of a motion to transfer and ordered the case transferred to the Northern District of California.  The plaintiff was an offshore entity that sued Link_A_Media, a corporation incorporated in Delaware, for patent infringement.  Link_A_Media brought a motion to transfer that was denied by Judge Robinson essentially on the grounds that a Delaware corporation should not be surprised when it is sued in Delaware, the plaintiff’s choice of forum should be given substantial deference, and the Section 1404 transfer factors relating to the convenience of witnesses and location of books and records are not entitled to substantial weight now-a-days and are outdated and irrelevant.

The Federal Circuit took clear exception to Judge Robinson’s ruling and indicated that she failed to properly balance the 1404 transfer factors and inordinately elevated the plaintiff’s choice of forum in the analysis, which the Federal Circuit noted under Third Circuit law was entitled to less weight when the plaintiff sued outside of its home forum, as here.  The Federal Circuit also indicated that the defendant’s state of incorporation is not a factor under Section 1404.

The Federal Circuit also rejected Judge Robinson’s contention that the case should stay in Delaware because the judges there had a high level of familiarity with patent cases.  This argument might work against some districts, but certainly not the Northern District of California, where the defendant sought to transfer the case.

All in all, the Federal Circuit largely got this one right, but there are a few points that the author would like to make.  First, as a patent litigator, determining which forum to file a patent case, or whether to seek a transfer out of a forum, is a fun analysis.  The variety in forums gives patent litigation flavor.  Although this is not a reason to scoff at the Federal Circuit’s recent penchant for issuing writs of mandamus to transfer cases, it is worth noting.

More seriously, it would seem that a corporation incorporated in a state should be subject to personal jurisdiction in that state, and, in fact, many states probably mandate such an outcome.  That point, in conjunction with 28 U.S.C. Section 1391(c), which states that a venue is proper in a district where a corporate defendant is subject to personal jurisdiction, begs the question – did the Federal Circuit get this one wrong?  If incorporation in a state subjects a corporation to jurisdiction in the courts of that state, then 28 U.S.C. Section 1391(c) would seem to mandate that venue is proper as well.  But, then, we get back to the fact that Section 1404 is a convenience transfer, and could justify transferring a case out of a district in a state where a corporation is incorporated.

The “jury” is out on this one, as far as I am concerned.  We are having disagreements about this in our office.  I am of the opinion that if a corporation chooses to incorporate somewhere, it should not be heard to complain that it is being sued there.  If you want to try to control where you get sued, incorporate in the state where you want to get sued.  Nonetheless, the law provides for convenience transfers, and the Federal Circuit ordered one here.  Whether it was right or wrong is a topic for debate.

I happen to enjoy the nuances and variations between district in patent cases, and hope this is not the death knell for forum shopping.

In Robert Bosch LLC v. Pylon Manufacturing Corp., the Federal Circuit on October 13, 2011 stated what was perhaps obvious at this point – there is no longer a presumption of irreparable harm when injunctive relief is sought where the requesting party has shown a likelihood of success on the merits.  Specifically, the CAFC stated, “We take this opportunity to put the question [of whether a rebuttable presumption of irreparable harm still exists post-eBay v. MercExchange] to rest and confirm that eBay jettisoned the presumption of irreparable harm as it applies to determining the appropriateness of injunctive relief.”  Slip Op. at 10.

The Court’s statement is rather broad, and appears to apply to preliminary injunctions as well.  Nonetheless, in the case, the CAFC reversed the district court’s denial of a permanent injunction and remanded with instructions to enter an appropriate injunction.  Thus, the case pertained to a permanent, not preliminary, injunction.  Because of the breadth of the CAFC’s statement (above), and the fact that many courts have already applied the eBay holding to preliminary injunction motions, it stands to reason that the CAFC’s holding will be interpreted to cover all motions for injunctions.  Thus, the presumption of irreparable harm appears to be dead. 

See our post from September 6, 2011 (“Flexible Lifeline Systems v. Precision Lift – Ninth Circuit Falls in Line with Supreme Court standard for preliminary injunctions“) for further details.

In Bettcher Industries, Inc. v. Bunzl USA, Inc., the Federal Circuit considered the issue of, when do the estoppel provisions of 35 U.S.C. Section 315 apply in the context of an inter partes reexamination of a patent? 

The pertinent portion of the statute (Section 315(c)) states:

A third-party requester whose request for an inter partes reexamination results in an order under section 313 is estopped from asserting at a later time, in any civil action arising in whole or in part under section 1338 of title 28, the invalidity of any claim finally determined to be valid and patentable on any ground which the third-party requester raised or could have raised during the inter partes reexamination proceedings. This subsection does not prevent the assertion of invalidity based on newly discovered prior art unavailable to the third-party requester and the Patent and Trademark Office at the time of the inter partes reexamination proceedings.

The CAFC held that the estoppel does not kick in until all appeals under Section 315(a) and (b) are exhausted, which would include appeals to the Board of Patent Appeals and Interferences, and appeals to the Federal Circuit.

This is potentially an important decision because litigants often desire to put a patent asserted in litigation into reexamination, and there are many benefits to inter partes reexamination over ex parte reexamination.  Yet, the concern over the effect of the estoppel in the litigation, as well as the timing of its application, often causes litigants to prefer ex parte reexamination, or forgo reexamination altogether.  This decision clarifies with certainty that the estoppel does not apply until all appeals are exhausted.

Bear in mind that this ruling is interpreting the law prior to the America Invents Act.  Many of the provisions for inter partes reexamination were changed in the America Invents Act.  Thus, the ongoing applicability of this holding requires an examination of the pertinent provisions of the America Invents Act, which is ongoing.  More to follow.

The Federal Circuit recently decided two cases regarding the patent eligibility of Internet related inventions under Section 101 of the Patent Act.  In the first case, Cybersource Corp. v. Retail Decisions, Inc., the CAFC found the Internet-based invention ineligible for patent
protection.  In the second case, Ultramercial, LLC v. Hulu, LLC, decided one month later, however, the CAFC found the Internet-based invention patent eligible.  The difference between the two cases appeared to be whether the inventive concept could be performed entirely in the mind or not.

In Cybersource, the patent-in-suit was directed towards a method of verifying the validity of a credit card transaction over the Internet.  The steps involved obtaining information about transactions, constructing a map of credit card numbers, and utilizing the map to determine if a credit card transaction is valid.  In ruling these claims patent ineligible, the CAFC determined that each of the steps could be performed entirely in the mind, and noted that even though the Internet could be considered a machine, the Internet was not required for the actual claimed steps.

In addition, a claim directed towards a computer readable medium containing program instructions to execute the steps above was also deemed patent ineligible.  The Court refused to exalt form over substance and viewed the apparatus claim as a process claim that can be performed entirely in the mind.

On the other hand, in the Ultramercial case, the court determined that a method claim for distributing copyrighted products over the Internet where the consumer receives a copyrighted product for free in exchange for viewing an advertisement was patent eligible subject matter.  In contrast to the panel in Cybersource, the panel in Ultramercial found that Ultramercial’s claims required the use of the Internet and a cyber-market environment.  In other words, the steps listed could not be performed entirely in the mind.

There is a “federal common law,” and when it comes to patent assignments, this
federal common law is unlike any other common law in the country.  Under federal common law, an employer may obtain a patent assignment from its employees on inventions even before the invention is conceived.  As a consequence, the very
moment an employee even conceives an invention, ownership of the invention
automatically vests in the employer.  Like quantum tunneling, it’s here, and now it’s there.  Nice and quick.

Is there a catch, you ask?  Yes.  In the employment agreement or other forward
looking contract, the employer must use the magic words, “the employee does hereby assign” to the employer his or her interest in each of the ideas and inventions developed as a consequence of his or her access to the employer’s facilities, equipment, or knowledge base.

In Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc., 131 S.Ct. 2188 (2011), the Supreme Court affirmed the Federal Circuit Court of Appeals decision finding that Stanford had no standing to sue Roche for patent infringement because Stanford never obtained any rights to the patented technology.  In doing so, the Supreme Court let stand the Federal Circuit’s holding that Roche’s “do hereby assign” language in Roche’s Visitor’s Confidentiality Agreement operated automatically to transfer to Roche all rights in an invention that the inventor did not actually conceive until years later.

Indeed, Stanford was the inventor’s actual employer, and as part of his employment
agreements upon joining Stanford as a research fellow, he signed an agreement in which he “agreed to assign” to Stanford his interests in any inventions resulting from his employment at Stanford.  This was months before the inventor signed any agreement with Roche, and it was Stanford itself which had introduced the inventor to Roche for joint
research efforts.  Nevertheless, the Federal Circuit held that the “I agree to assign” language that Stanford used created only a promise to assign in the future.  Thus, Roche wins.

Justice Breyer, in his dissent, complained that what seems like only a “slight linguistic difference in contractual language” creates a technical drafting trap for the unwary.  According to Justice Breyer, you will need to demonstrate that you are a member of the cognoscenti by using in employment agreements and other contracts the words that have now been “blessed” by the Federal Circuit, “I do hereby assign.”

In Flexible Lifeline Systems, Inc. v. Precision Lift, Inc., the Ninth Circuit formally fell into line with the Supreme Court’s standard for preliminary injunctions based on the eBay v. MercExchange (547 U.S. 388 (2006)) and Winter v. National Resources Defense Council (555 U.S. 7 (2008)) opinions.

In the present case, the district court found that the plaintiff was likely to succeed on the merits of its copyright infringement suit, and granted the preliminary injunction based on the long-standing precedent of the Ninth Circuit that presumes irreparable harm in a copyright infringement case upon a showing of a likelihood of success on the merits.  In fact, the district court did not make any findings on irreparable, but just presumed it.

The Ninth Circuit reversed, however, stating:

We conclude that presuming irreparable harm in a copyright infringement case is inconsistent with, and disapproved by, the Supreme Court’s opinions in eBay and Winter. Id. at *4. Thus, our long-standing precedent finding a plaintiff entitled to a presumption of irreparable harm on a showing of likelihood of success on the merits in a copyright infringement case, as stated in Elvis Presley and relied on by the district court, has been effectively overruled.  Slip Op. at 11300.

By now requiring a separate showing on presumption of irreparable harm for purposes of a preliminary injunction, and not permitting a presumption of irreparable harm any longer, the Ninth Circuit has fallen in line with the Supreme Court, as well as other circuits (as the Ninth Circuit’s opinion acknowledged at p. 11301-03 of the Slip Opinion).

I do not want to dive too deep in the weeds on the AIA Engineering Ltd. v. Magotteaux International case, but one comment from the Federal Circuit on claim construction caught my attention.  The comment, set forth below, is an example of a subtle point of law on claim construction that makes claim construction, at least to some degree, a fluid concept (which is great for patent litigators!).

Here is the comment from the Federal Circuit:

We have recognized that ‘the specification may reveal a special definition given to a claim term by the patentee that differs from the meaning it would otherwise possess.’  Phillips, 415 F.3d at 1316.  In such cases, ‘the inventor’s lexicography governs.’  Id.  Moreover, ‘[t]he specification need not reveal such a definition explicitly,’ but may do so ‘by implication.’  Astrazeneca LP v. Apotex, Inc., 633 F.3d 1042, 1051-52 (Fed. Cir. 2010) (internal quotation marks omitted).”  Slip Op. at 19.

This is not a new point of law that the Federal Circuit is relying upon to define a term by implication through its use in the intrinsic evidence.  But, the approach of the CAFC highlights the fluidity of the claim construction analysis – When is a term defined by implication?   What is the threshold for defining something by implication versus merely explaining an embodiment?

If anything, the quote may serve to remind patent litigators how many arrows are in their claim construction quivers.

On July 8, 2011, the Federal Circuit issued a claim construction ruling that raises a long-standing question in claim construction proceedings – when is a construction based on importing limitations from the specification versus when is a construction based on reading the claim language in light of the specification? 

In Retractable Technologies v. Becton Dickinson, the subject matter of one of the patents-in-suit was a retractable syringe where the needle retracts into the syringe body after the syringe is used.  One of the terms the Court construed was “body,” which appeared in both independent and dependent claims.  For example, in independent claim 25, a “body” was recited.  In dependent claim 31, “body” was limited to a “one-piece body.”  The issue in the case was whether “body” was limited to a “one-piece” in all claims reciting “body.”  At first blush, one might argue that the doctrine of claim differentiation would suggest or indicate that “body” in independent claim 25 would not be limited to a one-piece body because that limitation was expressly recited in dependent claim 31.

The Federal Circuit, however, saw the matter differently.  The majority opinion (J. Lourie and J. Plager) stated that “none of the claims expressly recite a body that contains multiple pieces.  Thus, while the claims can be read to imply that a ‘body’ is not limited to a one-piece structure, that implication is not a strong one.”  Slip Op., Majority at 15-16.

The majority then stated that ”any presumption created by the doctrine of claim differentiation ‘will be overcome by a contrary construction dictated by the written description or prosecution history.’”  Slip Op., Majority at 16.  In other words, a construction based on the specification or file history will trump a contrary construction obtained through the doctrine of claim differentation.

The majority then explained how its construction thta ”body” was to be limited to one-piece bodies, even in independent claim 25, was supported by the specification.

The majority then stated its position on claim interpretation:

“There is a fine line between construing the claims in light of the specification and improperly importing a limitation from the specification into the claims.  See Phillips, 415 F.3d at 1323.  In reviewing the intrinisic record to construe the claims, we strive to capture the scope of the actual invention, rather than strictly limit the scope of claims to disclosed embodiments or allow the claim language to become divorced from what the specification conveys is the invention.  Id. at 1323-34.”

Justice Rader (dissenting) on the other hand, while ascribing to essentially the same general claim construction “values” as the majority, appears to view the claim interpretation process as one in which the starting point is the ordinary and customary meaning of a claim term, essentially in a vacuum, and then the specification and file history are to be consulted to determine if the patentee acted as his or her own lexicographer, or whether there was any clear and unmistakable disavowal or intentional disclaimer of claim scope in the specification (or during prosecution).  One paragraph from Justice Rader’s dissent is illustrative:

“Certainly, the claims do not stand alone and must be read in light of the specification.  Phillips, 415 F.3d 1315.  Nothing in the specifications, however, rebuts the strong presumption created by the claim language that ‘body’ does not contain a one-piece structural limitation.  The specifications do not reveal a special definition given by the inventor to the word ‘body.’  Nor do the specifications contain an intentional disclaimer or disavowal of claim scope by the inventor.”  Slip Op., Dissent at 3.

At this point, I offer my own thought to say that, in litigation, one of the most frustrating things as a defendant is to have the plaintiff participate in claim construction discussions only to say that he or she is relying on the ordinary and customary meaning of a given term and offer either no construction, or one that is essentially a dictionary definition that is unreasonably broad and that is largely divorced from the intrinsic evidence.  I think the problem here is with the presumption that claim language will be construed in its ordinary and customary meaning, or at least the way that maxim is interpreted and used.

To me, Justice Rader’s approach, with all due respect, is a lot like Texas Digital‘s use-the-dictionary and see if the intrinsic evidence contradicts the dictionary definition in any way, and if so, the dictionary definition of the term under construction can be limited as such.  How is using the ordinary and customary meaning (which is often derived from a dictionary definition in practice anyways) and determining if the specification or file history contradict the ordinary and customary meaning really any different, in practice, than the Texas Digital approach, which was rejected by the Federal Circuit sitting en banc in Phillips?  In practice, I don’t think it is, except in limited occasions perhaps where a technical dictionary is used.  While this may be a great approach for patent owners, I think it can do a significant disservice to the public notice function of patents, and it leads to erroneous claim constructions to the extent terms are construed in a vacuum.

The approach of the majority in Rectractable Technologies v. Becton Dickinson seems to focus on the intrinsic record almost exclusively to define claim terms.  It looked at the claim language and specification to gauge the possible constructions for “body”, and then it looked at the same claim language and specification to zero in on the correct construction.  And, because the patentee addressed the prior art in the specification, a consideration of how the prior art impacted what the patentee claimed was invented was considered as well.

While claim construction may not be simple, and while it may be desirable to create presumptions to simplify or streamline the process, presumptions related to claim construction can do a disservice to the public notice function of patents.  What seems to be needed is an analysis of the intrinsic evidence to determine how a claim term is used in the context of the patent; not an assessment of what the term means generally and then determine if the patentee defined the term differently, or if there was any clear disavowal or disclaimer of claim scope in the intrinsic evidence.  There is certainly a place for the tools presently used to assess the scope and meaning of claim terms.  But, using the ordinary and customary definition of a term (which is usually divorced from the specification) is not a good starting point.  The point I am highlighting is captured at p. 17 of the Majority Opinion:

“In reviewing the intrinsic record to construe the claims, we strive to capture the scope of the actual invention, rather than . . . allow the claim language to become divorced from what the specification conveys is the invention.”  Slip Op., Majority at 17.

Justice Plager’s concurring opinion is a good read regarding the foibles of construing claim terms in a vacuum.  He states that “[t]he specification is the heart of the patent.  In colloquial terms, ‘you should get what you disclose.’”  Slip Op., Concurring at 2.

Patent prosecution practice points – In one part of the majority opinion, the majority stated, “[i]n distinguishing prior art syringes comprised of multiple pieces, the specifications state that the prior art had failed to recognize a retractable syringe that ‘can be molded as one piece outer body.’  ’733 Patent, col. 2 ll. 26-31.  Consistent with this characterization of the prior art, the Summary of Invention states that ‘[t]he invention is a retractable tamperproof syringe,’ and that this syringe ‘features a one-piece hollow body.’”  The take home message from this portion of the opinion, at least as to the two jurists who joined the opinion, is that patent prosecutors should be careful to include only the broadest description of the invention in any “Summary of the Invention,” and should be very careful in attempting to distinguish art in the patent document.  In some cases, it may be good practice not to refer to the prior art at all in the patent document.

Last week, the Northern District of California, a popular district for patent litigation, unveiled an expedited trial program.  According to the Court’s website, these are the main features of the program:

• The program is consensual and binding;
• A case may be tried to a judge or jury;
• To participate, the parties execute an “Agreement for Expedited Trial and Request for Approval”;
• Expedited time schedules and rules of procedure begin when the court approves the Agreement;
• The goal is to try the case in six months;
• Discovery is limited to ten interrogatories, requests for production and request for admission each and 15 hours of deposition time to be used at the party’s discretion;
• Experts are limited to one per side absent agreement of the parties or leave of the court;
• Pretrial motions require leave of court and may not exceed three pages;
• Neither the terms of the Agreement nor its existence may be revealed to the jury;
• Juries will consist of six jurors which may be reduced to five should a juror become unable to serve;
• The judge conducts jury voir dire and sets time limits for openings and closings;
• Each side is allowed three hours per side for presentation of its case, including cross-examination;
• Post-trial motions are limited to recovery of costs and attorney’s fees;
• Grounds for new-trial motions and appeals are limited.

Here is a link to the entire order - General Order No. 64.

Would anyone dare try this in a patent case?  Could a patent case even be done under these procedures?  Are patent cases even eligible for the program (I do not see any express prohibition on patent cases in the Order)? 

This obviously would require consent of both parties to a case, but if both parties were amenable to this approach it could produce a significant cost savings relative to typical patent cases.

Don’t worry!  This is not going to be an endless diatribe about the appropriateness of the jury verdict in the Casey Anthony trial, or some other extended commentary on the case.  As someone who did not pay that much attention to the case, other than the closing arguments, verdict, and some subsequent commentary, I do not have that much to offer on the details of the case.  My observations, however, have led me to conclude that there are some valuable, potentially obvious, but sometimes forgotten, take home messages from the outcome of the case.

Specifically, regarding the outcome, the general consensus is that the prosecution simply did not have the evidence it needed to meet the applicable standards of law and burden of proof for murder, and the defense attorneys hammered that point home in their closing.  That appears to be what won them the acquittal on the key charges.  What can we learn from this?

(1)    Know the legal standards that apply to your claims early on and seek proof that will satisfy those standards – While I am sure the prosecutors in the Casey Anthony case knew the standards, their evidence did not seem to rise to the level of the standards, and thus, it failed.  For patent litigators, for example, invalidity must be proven by clear and convincing evidence (per i4i v. Microsoft), and in some cases, the primary evidence must be corroborated.  A judge or jury will hold us to this standard, and we need to make sure we can meet it, or we should drop our claim or defense.

(2)    Directly address the applicable legal standards and standards of proof in any type of dispositive motion (or at trial) – Again, while I am sure the prosecutors in the Casey Anthony case knew the standards, they were unsuccessful in attempting to convince the jury how the evidence they presented satisfied the standards.  The defense did a skillful job in directly pointing out these shortcomings in closing, and won the case.  The take home message for IP litigators, or any litigators, is to dot our “I’s” and cross our “t’s” when seeking a ruling on the merits from the court or a jury.  We need to specifically show how the evidence we have meets the applicable standard of proof and elements of the claim.  If we cannot do that, we should not waste the court’s or jury’s time.

(3)    The system worked – As much as the verdict in the Casey Anthony case may have frustrated some people, the system appears to have worked.  We have standards and rules, and they simply were not met.  The outcome reflected an evidentiary failure, and thus, the system worked.  Emotions did not win the Casey Anthony case for the state, nor should they have – evidence should.

I leave you with a quote I find handy when seeking documents or other information from clients – the quote also being applicable to the Casey Anthony case, and all litigators:

“It’s not what you know, it’s what you can prove”

Alonzo Harris (Denzel Washington) – Training Day.