Corresponding Suit / in Europe is Enough to / Bring D J Action

Arkema, Inc. v. Honeywell International, [2012-1308] (February 5, 2013) [DYK, Plager, O'Malley] the Federal Circuit reversed the refusal of the district court to allow Arkema to amend its declaratory judgment action to include two after-issued Honeywell patents, and remanded for further proceedings.
DISCUSSION: After being sued by Honeywell in Europe for infringement of a patent on a more environmentally friendly refrigerant, Arkema brought a declaratory judgement action challenging the validity and infringement of the corresponding U.S. patent. While this suit was pending, two additional U.S. patents issued on the use of the refrigerant. Arkema sought to amend its complaint to add these patents, but the district court found that as a mere supplier, Arkema was not currently or imminently in danger of facing liability for contributory or induced infringement on the patents on methods of using the refrigerant. The Federal Circuit said that Article III jurisdiction may be met where the patentee takes a position that puts the declaratory judgment plaintiff in the position of pursuing arguably illegal behavior or abandoning that which he claims a right to do. The Federal Circuit concluded that it was a "quintessential example of a situation in which declaratory relief is warranted." The Federal Circuit said that there do not have to be acts of direct infringement for declaratory judgment jurisdiction, nor do there have to be specific accusations against the potential direct infringers or their supplier. The Federal Circuit also noted that even under the iscarded "reasonable apprehension" test, accusations of infringement in related litigation were sufficient to confer jurisdiction, and thus the European litigation between the parties was a sufficient affirmative act by Honeywell establishing a case and controversy between the parties.

Fairness Applies to • Waiver, but do not Disclose Letters • from your Attorney

Kilpatrick Townsend & Stockton LLP v. LG Electronics, Inc., [2011-1626] (July 13, 2012) [CLEVENGER, Moore, Reyna] The Federal Circuit vacated contempt sanctions against the Kilpatrick law firm for failing to produce documents in response to a subpoena, finding that the District Court did not apply the proper analysis of privilege.

DISCUSSION: In an attempt to persuade LG that it owned Wi-Lan royalties, Wi-Lan sent LG a copy of a letter  Wi-Lan received from its outside counsel from the Townsend firm.  The letter did not persuade LG, so Wi-Lan sued LG for patent infringement, using the Kilpatrick firm.  LG took the position that by sharing the letter from Townsend, Wi-Lan waived privilege as too all firms, and subpoenaed documents from the Kilpatrick firm.

The Federal Circuit found that the applicability of attorney-client privilege where subject matter jurisdiction depends on a question of patent law is governed by federal common law, although questions about the handling of subpoenas were governed by the law of the regional circuit.  The Federal Circuit found that the Townsend letter was both privileged and confidential, and its disclosure was a waiver of privilege at least as to the letter.  The Federal Circuit said that modern law requires fairness balancing for certain varieties of privilege waiver.  FRE 502(a) required fairness in the scope of waiver in the contest of litigation, and the Federal  Circuit concluded that the Ninth Circuit would apply fairness in a pre-litigation context as well, and thus the district court erred when it failed to consider fairness.  The Federal Circuit declined to evaluate fairness in the first instance and remanded it for further proceedings,  The Federal Circuit vacated the contempt finding, but noted that the Kilpatrick firm failed to pursue it options to properly contest the subpoena.

BEST PRACTICES: In this case the marking of every page as confidential contributed to the finding that the documents were privileged.  Attorneys should be careful what they mark as "confidential" or "privileged".  Attorneys should also remind clients not to disclose their communications to third parties.  

"Hereby Assigns" in • an Employee Agreement • Transfers Invention

Preston v. Marathon Oil Company, [2011-1013, -1026] (July 10, 2010) [O'MALLEY, Bryson, Dyk] The Federal Circuit affirmed summary judgment that Preston assigned rights in U.S. Patent Nos. 6,959,764 and 7,207,385 by virtue of his employment agreement.

DISCUSSION: After accepting employment at will by Marathon, Preston signed an Employee Agreement pursuant to which he automatically assigned inventions he made.  He identified a CH4 Resonating Manifold as a "previous" invention.  The Federal Circuit certified the question of whether continued employment was adequate consideration for an intellectual property assignment, and the Wyoming Supreme Court answered; "yes."  The Federal Circuit rejected Preston's argument that the invention was not intellectual property under the agreement because it had already been conceived at the time of the agreement, and it rejected the argument that the invention was expressly reserved.  The Federal Circuit noted that construction of patent assignment agreements is a matter of state law.  Because the agreement required that the inventions "made or conceived" be assigned, unless the invention was both made and conceived prior to employment, the employee agreement applied.  The Federal Circuit further found that invention necessarily requires at least some definite understanding of what has been invented.  The evidence did not support the conclusion  that Preston was not in possession of an excludable invention before he began employment at Marathon.  The Federal Circuit agreed with the district court's finding that Preston's testimony regarding the level of development was not credible, and at most had little more than a vague idea before his employment began.

The Federal Circuit reversed the district courts' finding that Preston breached the employment agreement by not assigning the invention because the employee agreement to "hereby assign" automatically assigned rights to the invention without the need for any additional act.
BEST PRACTICE: One again, an employee agreements should always contain a current assignment of future inventions.

Considered or not • The Burden Never Changes • Clear and Convincing

Sciele Pharma Inc. v. Lupin Ltd., [2012-1228] (July 2, 2012)[MOORE, Lourie Proust] The Federal Circuit vacated a preliminary injunction against Lupin's launch of a generic version of Fortamet that Sciele alleged Lupin infringed U.S. Patent No. 6,866,866.
DISCUSSION: The '866 patent issued with claims that the Examiner found problematic, and the applicant cancelled.  The district court granted a preliminary injunction, which the Federal Circuit reversed and remanded because the district court didn't even consider obviousness.  On remand the district considered obviousness but since all of the art was considered by the USPTO found that Lupin had not overcome the deference due a qualified government agency presumed to have done its job.  Both parties argued that the burden of proving invalidity was changed by the facts of the case, and the Federal Circuit found that both parties were wrong, and that the burden of proof never changes.  The Federal Circuit noted that "clear and convincing evidence" already reflected the burden of overcoming the presumption of overcoming the deference that is due a qualified government agency presumed to have done its job.  The court said "whether a reference was previously considered by the PTO, the burden of proof is the same: clear and convincing evidence of invalidity.  There is no heightened burden when a reference has been previously considered, and no lessened burden when there is a reference that has not been considered.

Minkin v. Gibbons, P.C., [2011-1178] (May 4, 2012) [REYNA, Rader, O'Malley] The Federal Circuit affirmed summary judgment for a patent law firm because the former client did not show that its hypothetical alternate claim was ptaentable.
DISCUSSION:  Minkin claimed that his patent lawyers committed malpractice in failing to get broad enough claims in U.S. Patent No. 6,012,363.  However, Minkin made no attempt to show that his proposed alternate claim would have been allowed by the U.S. Patent Office.  The district court granted summary judgment, finding that Minkin's expert "utterly fails to provide any sort of analysis with respect to the non-obviousness of his claims and give s no opinions or explanation showing why his claims would not be deemed obvious."  The Federal Circuit agreed, stating that "providing no evidence of nonobviousness failed to establish a genuine dispute of material fact as to the patentability of its alternate claims."
 

Mere Arguments in / Reexam Do Not Create / Intervening Rights

Marine Polymer Technologies, Inc. v. Hemcon, Inc., [2010-1548] (March 15, 2012) [LOURIE] The Federal Circuit en banc affirmed judgment of the district court by an equally divided court, vacating an earlier panel decision that reversed the decision finding intervening rights were created by the patentee's arguments during reexamination.
DISCUSSION: The Federal Circuit held that the reexamination statute only provides for intervening rights when claims are amended, and not as a result of patentee's argument. In so doing the Federal Circuit applied to Canons of claim construction, the first, that use of the phrase "the invention" has a limiting effect on the scope of the claims, and second that claim differentiation is note a hard and fast rule. In addressing the intervening rights question, the Federal Circuit explained that "under §307(b), the first question when assessing whether intervening rights arose form a reexamination is whether the asserted claim is "amended or new"; if the answer is no, that ends the inquiry. Only if the claim at issue is new or has been amended may the court proceed to the second step in the analysis and assess the substantive effect of any such change pursuant to §252."

To be Your Own Lexicographer, You have to Do So Clearly

In re Chaganti, [2011-1344] (March 9, 2012)[NEWMAN, REYNA, WALLACH] The Federal Circuit affirmed the BPAI's decision affirming the rejection of Chaganti's claims.
DISCUSSION: At issue was whether the claims directed to a computer-implemented method of marketing an intangible property interest excluded stocks and bonds. While Chaganti argued that when properly construed in light of the specification, "intangible property interest", the Federal Circuit disagreed, noting that while a patentee may act as his own lexicographer, a a patentee must clearly express that intent in the written description.

Canos of Claim Construction Requie Reversal

Digital-Vending Services International, LLC v. The University of Phoenix, Inc., [2011-1216] (March 7, 2012) [RADER, Linn, Moore] The Federal Circuit vacated summary judgment of non-infringement as to some claims and affirmed summary judgment of non-infringement as to other claims, and remanded.
DISCUSSION: The Federal Circuit noted that a party may not introduce new claim construction arguments on appeal or alter the claim construction positions it took below, and refused to consider arguments not presented to the court below. The Federal Circuit relied on a number of Canons of claim construction, including that a claim term is presumed to have the same meaning throughout all of the claims, in the absence of any reason to believe otherwise. The Federal Circuit also relied upon the rule that "claims are interpreted with an eye toward giving effect to all terms in the claim." The Federal Circuit also noted that the specification avoided any hint that the inventors clearly disavowed claim scope. Finally the Federal Circuit noted the rule that because the prosecution history represents an ongoing negotiation between the PTO and the applicant, rather than the final product of that negotiation, it often lacks the clarity of the the specification, and thus is less useful for claim construction purposes. The Federal Circuit reversed the grant of summary judgment on non-infringement of the affected claims, but affirmed as the the remanider

An Invention that Can Be Made with Routine Experimentation is Obvious

In Re Pepperball Technologies, Inc., [2011-1137] (March 7, 2012) [NON-PRECEDENTIAL] The Federal Circuit affirmed the BPAI's affirmance of the rejection of the claims of U.S. Patent Nos. 6,393,992 and 7, 194,960 during reexamination.
DISCUSSION: The Federal Circuit analyzed the references and agreed with the BPAI that the invention could have been made by a person of ordinary skill in the art "with routine experimentation" and thus was obvious.

Lack of Corrporation Defeats Claim of Co-invention

Weaver v. Houchin, [2011-1327] (March 7, 2012) [NON-PRECEDENTIAL] [LOURIE, BRYSON, MOORE] The Federal Circuit affirmed summary judgment that Weaver failed to prove he was a coinventor of U.S. Patent No. 7,316,614.
DISCUSSION: After U. S. Patent No. 7,316,614 issued with five inventors, but a Certificate of Correction issued removing four of the inventors, who then filed suit. The other deleted inventors dropped out, but Weaver persisted. However, the district court found that Weaver's claim of co-invention lacked corroboration, and the Federal Circuit agreed.

Applicant for a Standard Character Mark Can't Rely Upon Design Differences wtih a Cited Composite Mark

In Re Viterra Inc., [2011-1354] (March 6, 2012)[O'MALLEY, DYK, MOORE] The Federal Circuit affirmed the TTAB decision that applicant's mark XCEED is likely to cause confusion with the existing mark XSEED.
DISCUSSION: The Federal Circuit reviews the TTAB's legal conclusions de novo and is factual findings for substantial evidence. Viterra conceded the goods were identical, and could not challenge the channels of trade because they were not restricted in either its application or the cited registration. Viterra focused on the dissimilarity of the marks, arguing that the marks were different because of the design in the cited registration; the marks are phonetically different because its mark would be pronounced as one word, while the cited registration would be pronounced as two words, and finally that its mark means "exceed" while the cited registration could have several meanings.
The Federal Circuit instructed that the marks must be considered in their entireties, although it may place more weight on a dominant portion of a mark, for example where a part of the mark is descriptive or generic standing alone. The Federal Circuit noted that in the case of composite mark containing both words and a design, the verbal portion is the part most likely to indicate origin. The Federal Circuit noted that where one of the marks is presented in standard characters, the differences in appearance must take into account that the standard character mark could be presented in a manner similar to the design mark. The Federal Circuit also noted that disclaimed matter can still be a part of the dominant portion of a mark for purposes of comparison.
The Federal Circuit concluded that there was substantial evidence supporting the TTAB's decision and affirmed it.

As logn as the Initial Reissue Application is Filed within Two Years, Subsequent Broadening Continuation Reissue Applications can be filed Any Time

In re Staats, [2010-1443] (March 5, 2012) [DYK, O'Malley, Reyna] The Federal Circuit reversed and remanded the BPAI's rejection of claims as being improperly broadened by a reissue filed more than two years after issuance.
DISCUSSION: Staats filed a broadening reissue application within two years from the issuance of the patent relating to the the first preferred embodiment of the invention. While the reissue application was pending, but more than two years from the issuance of the patent, Staats filed a second broadening reissue application relating to the first preferred embodiment. While the second reissue patent application was pending, well almost seven years after the issuance of the patent, Staats filed a third broadening reissue application, and eventually included claims directed to a second embodiment. These were rejected by the Examiner as untimely because they were not related to the subject matter of the original broadening reissue application, and the BPAI affirmed. The Federal Circuit reversed, finding In re Doll, 419 F.2d 925 (C.C.P.A. 1970), which held that the Section 251 time limit applies only to the filing of the first broadening reissue application. The Federal Circuit rejected the PTO 's attempt to distinguish Doll because the subject matter of the later filed broadening reissue application was not related to original reissue application. The Federal Circuit said that In re Doll made no such distinction, and in any event a different approach would be "unmanageable".

Stay away from the Swamp; Decide §§102, 103 and 112 Issues First

Myspace, Inc. v. Graphon Corporation, [2011-1149] (March 2, 2012)[PLAGER, Newman, Meyer] The Federal Circuit affirmed summary judgment of invalidity.
DISCUSSION: Plaintiffs brought a declaratory judgment action that U.S. Patent Nos. 6,324,538, 6, 850,940, 7, 028, 034, and 7, 269, 591 relating to the creation, modification, and searching of databases.
DISCUSSION: At issue was the construction of the term "database", which was important to whether the the claims were anticipated, for which summary judgment is appropriate, or obvious, for which summary judgment is less appropriate. The Federal Circuit began with the ordinary meaning of the claim language itself in the context of the written description of the invention found in the patent and the prosecution history. The Federal Circuit addressed commentators who have pointed out two different approaches to claim construction: the first focusing on the invention disclosed in the patent, and the second focusing on the words used by the patent drafter. The Federal Circuit said it was an oversimplification to consider them competing theories, rather than complementary. Agreeing with the district courts' broad interpretation of "database" the Federal Circuit affirmed the invalidity of the claims.
The Federal Circuit also took time to comment on the minority position that the question of patentable subject matter under §101 should have been addressed first. The majority said that the courts should avoid the swamp of verbiage that is §101 and insist that litigants initially address patent invalidity issues under §§102, 103, and 112.

Multiple Claims Can Be "Such a Claim" in 135(b) to Support an Interference

Pioneer Hi-Bred International, Inc. v. Monsanto Technology, LLC, [2011-1285] (February 28, 2012) [CLEVENGER, Prost, Reyna] The Federal Circuit affirmed the BPAI's decision that Monsanto's claims were not time barred under 35 USC 135(b)(1), and that Monsanto had seniority.
DISCUSSION: The Federal Circuit agreed with the BPAI's interpretation of 35 USC 135(b) that Multiple pre-critical date claims, considered together, can provide the foundation necessary for a later claim to be found timely. Thus Monsanto was able to support a single post-critical date claim in its application in inteference, with a plurality of pre-critical date claims which taken together, supported the subject matter in interference.

Coach thought it had Fame in the Bag, but Failed to Establish Dilution

Coach Services, Inc., v. Triumph Learning LLC, [2011-1129] (February 21, 2012) [O'MALLEY, Newman. Reyna] The Federal Circuit affirmed the TTAB 's dismissal of Coach Services' opposition to Triumph Learning's application to register COACH. The Federal Circuit remanded for further consideration of TRIUMPH's substantially exclusive and continuous use of its marks.
DISCUSSION: Triumph was seeking to register COACH for services relating to the preparation for standardized tests, while COACH, the make of designer goods sought to block the registration. The TTAB found that it weighed the DuPont factors and found there was no likelihood of confusion because the parties marks had different meaning and engender different commercial impressions and the goods involved. The Federal Circuit agreed. The Federal Circuit noted that the same marks can create different commercial impressions in connection with the goods on which they are used. The Federal Circuit agreed that applicant's use of COACH brought to mind different impression than Opposer's list. The Federal Circuit also agreed with the TTAB that the goods were unrelated. Finally the Federal Circuit agreed that the channels of trade and customers were different. The Federal Circuit also agreed with the TTAB that there was no dilution. finding that Opposer had not show sufficient fame of its COACH mark. However, the Federal Circuit found question of whether applicant's mark was merely descriptive, and remanded for further consideration of whether applicant had adequately shown secondary meaning.

The Name of the Game is the . . . Spec?

Retractable Technologies, Inc. v. Becton, Dickinson And Company, 2010-1402 (July 8, 2011) [LOURIE, Rader, Plager] the Federal Circuit affirmed in part and reversed in part judgment that Becton Dickinson infringed U.S. Patent Nos. 5,632,733, 6,090,077, and 7,351,224 on syringes with retractable needles.

DISCUSSION: The primary issue on appeal was whether the district court erred in construing “a hollow syringe body” in several of the claims in dispute as not being limited to a one-piece hollow syringe body.

While there was a dependent claim that limited the body to a “one-piece body” which tended to imply the independent claim was not so limited, the Federal Circuit found that this implication was “not a strong one”, noting that independent claim that “none of the claims expressly recite a body that contains multiple pieces”.

The Federal Circuit said that “[i]t is axiomatic that the claim construction process entails more than viewing the claim language in isolation” and that [c]laim language must always be read in view of the writ-ten description”. The Federal Circuit found that the specification indicated that “body” referred to a one-piece body. The Federal Circuit pointed to the Background of the Art said:

U.S. Patent No. 5,632,733, col. 2, ll. 26-31. The Federal Circuit also pointed to the Summary of the Invention:

U.S. Patent No. 5,632,733, col. 2, ll. 45-47. The Federal Circuit noted that the Detailed Description repeatedly mentions the one-piece construction:

U.S. Patent No. 5,632,733, col. 5, ll. 54-56.

U.S. Patent No. 5,632,733, col. 10, ll. 9-10. In contrast, the Federal Circuit noted that the “specifications do not disclose a body that consists of multiple pieces or indicate that the body is anything other than a one-piece body”.

Noting that 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, the Federal Circuit identified it “strive[s] 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.” The Federal Circuit said that “while the claims leave open the possibility that the recited ‘body’ may encompass a syringe body composed of more than one piece, the specifications tell us otherwise.” The Federal Circuit concluded that “a construction of “body” that limits the term to a one-piece body is required to tether the claims to what the specifications indicate the inventor actually invented.”

SIGNIFICANCE:

1. While Judge Rich famously proclaimed “the name of the game is the claim” (Giles S. Rich, The Extent of the Protection and Interpretation of Claims-American Perspectives, 21 Int'l Rev. Indus. Prop. & Copyright L., 497, 499 (1990) ("To coin a phrase, the name of the game is the claim."), in a post-Philips world the specification is can undo the work of a careful claim drafter.

2. When drafting a specification, describe alternatives, and when an adjective is used (e.g. one-piece) specifically contemplate alternatives.

3. When employing claim differentiation, don’t rely on a dependent claim specifically claiming the preferred embodiment to broaden the base independent claim, specifically claim alternatives to the preferred embodiment.

Findings on Intent Lacking in first Post-Thersense Inequitable Conduct Case

American Calcar, Inc. v. American Honda Motor Co., Inc., 2009-1503, -1567 (June 27, 2011) [LOURIE, Bryson Gajarsa] the Federal Circuit affirmed summary judgment decisions of non infringement, reversed the denial of JMOL on the validity of the ’759 patent, and vacated and remanded the finding of inequitable conduct.

DISCUSSION: Although the question of inequitable conduct was presented to the jury for an advisory determination, the Federal Circuit said that inequitable conduct is equitable in nature, with no right to a jury, and the trial court has the obligation to resolve the underlying facts of materiality and intent. The Federal Circuit said that its en banc decision in Therasense that to prove inequitable conduct, the accused infringer must provide evidence that the applicant (1) misrepresented or omitted material information, and (2) did so with specific intent to deceive the PTO.

Under Therasense, the materiality required to establish inequitable conduct is, in general, but-for materiality. When an applicant fails to disclose prior art to the PTO, that prior art is but-for material if the PTO would not have allowed a claim had it been aware of the undisclosed prior art. Further, while deceptive intent can be inferred from indirect and circumstantial evidence, that “inference must not only be based on sufficient evidence and be reasonable in light of that evidence, but it must also be the single most reasonable inference able to be drawn from the evidence to meet the clear and convincing standard.” The Federal Circuit reiterated that in a case involving nondisclosure of information, clear and convincing evidence must show that the applicant made a deliberate decision to withhold a known material reference.

The Federal Circuit noted that the withheld information may be material if it would have blocked patent issuance under the PTO’s preponderance of the evidence standard, giving those patents’ claims their broadest reasonable construction. However it could not infer that finding from the district court’s opinion, so it vacated and remanded the case.

Under Therasense, “the accused infringer must prove by clear and convincing evidence that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it.” The Federal Circuit noted that although the court performed a detailed analysis of the facts withheld, it made no holding that any of the inventors knew that the withheld information was in fact material and made a deliberate decision to withhold it. The Federal Circuit said that instead, the district court relied on the sliding scale standard that was rejected in Therasense, basing its finding of intent significantly on the materiality of the 96RL system to the claimed invention. The Federal Circuit said that it was not its task to make factual findings, and vacated the district court’s finding of intent and remand the issue to the district court.

Regarding the summary judgment of non-infringement, the Federal Circuit agreed with the district court that the language of the summary and the detailed description limited the meaning of the claims, despite the fact that at least the summary used the language “for example” as well as an argument based upon claim differentiation, noting that if a claim will bear only one interpretation, similarity will have to be tolerated.

The Federal Circuit also held the patentee to a narrower construction of the term “source”, noting that it may reach a narrower construction, limited to the embodiments disclosed in the specification, when the claims themselves, the specification, or the prosecution history clearly indicate that the invention encompasses no more than that confined structure or method. On the issue of equivalents, the Federal Circuit found that ACI failed to provide particularized testimony and linking argument as to the ‘insubstantiality of the differences’ between the claimed invention and the accused device or process, and in any event finding a signal from one source to be equivalent to “signals from a plurality of sources” would vitiate that claim limitation by rendering it meaningless.

The Federal Circuit agreed with the district court’s claim construction and that “in response to” connotes that the second event occur in reaction to the first event. This was supported by the language of the claim itself. The Federal Circuit further observed that the specification did not disclose any embodiment that requires intervening action.

Transfer Right When You Pick A Court Just For Venue Court Needs Link to Case

In re Acer, Misc. No. 942, [SCHALL, Gajarsa, Moore] (2010), the Federal Circuit granted a petition for mandamus transferring the case from the Eastern District of Texas to the Northern District of California. Mandamus is available to correct correct a “patently erroneous denial of transfer”. The Court must consider both the private interest factors of (1) the relative ease of access to sources of proof; (2) the availability of compulsory process to secure the attendance of witnesses; (3) the cost of attendance for willing witnesses; and (4) all other practical problems that make a trial easy, expeditious, and inexpensive, and the public interest factors of (1) the administrative difficulties flowing from court congestion; (2) the local interest in having localized interests decided at home; (3) the familiarity of the forum with the law that will govern the case; and (4) the avoidance of unnecessary problems of conflicts of laws or in the application of foreign law. Mandamus was used to correction a “patently erroneous denial of transfer”.
The Federal Circuit concluded “the convenience of the parties and witnesses, the sources of proof, the local interest, and the compulsory process factors all significantly favor transfer. Mean-while, no factor remotely favors keeping this case in the Eastern District of Texas. Although Dell may be a likely source of evidence at trial.”

Induce Infringement / Without knowledge of Patent / Don't Turn A Blind Eye

SEB S.A., v. Montgomery Ward & Co., Inc., [2009-1099, -1108, -1119] (February 5, 2010) [RADER, Bryson, Linn] The Federal Circuit affirmed the holding that U.S. Patent No. 4,995,312 was valid, and infringed, and that defendant had induced infringement of the patent.
DISCUSSION:
Claim Construction: U.S. Patent No. 4,995,312 covers a deep fryer having a heated pan, and a plastic skirt that is “completely free with respect to the pan”. The limitation “completely free with respect to the pan” was construed to mean “there are no thermal bridges between the skirt and the pan.” The patented device had screws fixing the skirt, but these were thermally isolated and thus were not thermal bridges. The Federal Circuit perceived a slight internal inconsistency with the district court’s claim construction of “completely free” in the phrase “said skirt (3) being completely free with respect to the pan (1) with the exception of a ring (5)” because if “completely free” merely meant “no thermal bridges between the skirt and the pan,” the claim would not need to exclude expressly the ring from the completely free limitation with the fact that there was an insulting ring between the skirt and the pan. Despite the inconsistency, to the Federal Circuit the district court’s construction of “completely free” rings true. The Federal Circuit, applying the Canon that “Differences among claims can . . . be a useful guide in understanding the meaning of particular claim terms”, noted that if “completely free” actually meant “completely free” then claim 8, which calls for a rod, would be excluded. Furthermore, applying the Canon that “[A] construction that would not read on the preferred embodiment would rarely if ever be correct and would require highly persuasive evidentiary support.” the Federal Circuit said if “completely free” meant “completely free” then the claim would not cover the only embodiment. The Federal Circuit put great stock in the fact that the specification repeatedly highlights the inventiveness of eliminating thermal bridges to prevent heat transfer to the plastic skirt, and was apparently untroubled by the fact that applicant forsook this language in favor of “completely free”. The patent prosecutors (from the big city of Arlington, Virginia, got it right, while defendant’s counsel “from the middle of nowhere” (see below) doesn’t get the benefit of the doubt. The Federal Circuit said that read in light of the entire specification and with an eye to the preferred embodiment, then, the term “completely free” means “practically or functionally free.”

Because of the jury instructions, the Federal Circuit had to conclude that there was both direct infringement and inducement in order to affirm.
Actual Infringement by f.o.b. sales abroad:
As to direct infringement, defendant argued two points: First, an offer in the United States to sell goods outside of the United States does not violate the “offer to sell” provision of § 271(a). Second, in determining if a sale occurred in the United States, it was erroneous to consider “where the products were shipped from and where the products were shipped to”. The Federal Circuit observed that it had yet to define the full territorial scope of the “offers to sell” offense in § 271(a), but did point out that in Rotec Indus., Inc. v. Mitsubishi Corp., Judge Newman, concurring said that “[A]n offer to sell a device or system whose actual sale can not infringe a United States patent is not an infringing act under § 271.” The Federal Circuit said that the sales did not so clearly occur overseas that the district court’s failure to include such a limitation in its jury instructions affected the integrity of the trial. The Federal Circuit said that the only evidence of where sales occurred was that the products were delivered f.o.b. Hong Kong or mainland China. However, the Federal Circuit said that it has “rejected the notion that simply because goods were shipped f.o.b., the location of the ‘sale’ for the purposes of § 271 must be the location from which the goods were shipped.” Citing Lightcubes. Thus the district court’s instruction that the jury could consider “where the products were shipped from and where the products were shipped to” was not error.
Inducement by Turning A Blind Eye:
The district court found that there is no evidence that defendant was aware of the ’312 patent before April 9, 1998, but still found evidence to support plaintiff’s theory of inducement. This “evidence” included the fact that despite the fact that there are “a zillion patent attorneys in New York City” defendant went to a “guy in the middle of nowhere” to clear the product. The district court found that this was enough for the jury to infer that defendant understood that he was likely violating a patent. Implicit in this finding are: 1. Binghamton New Your is in the middle of no where, and 2. The zillionth best patent attorney in New York City, is better than any patent attorney in Binghamton.
Defendant argued that it could not be held liable for inducing a patent that it did not actually know existed, citing DSU Med Corp. v. JMS Co., which said that “The requirement that the alleged infringer knew or should have known his actions would induce actual infringement necessarily includes the requirement that he or she knew of the patent.”. However Federal Circuit said that DSU Medical did not set out the metes and bounds of the knowledge-of-the-patent requirement. In the Federal Circuit’s words, DSU Medical “decided the target of the knowledge, not the nature of that knowledge”.
The Federal Circuit said that inducement requires a showing of “specific intent to encourage another’s infringement” but that specific intent is not so narrow as to allow an accused wrongdoer to actively disregard a known risk that an element of the offense exists. The Federal Circuit said that the standard of deliberate indifference of a known risk is not different from actual knowledge, but is a form of actual knowledge, and a party’s knowledge of a disputed fact may also be proved through evidence that he consciously avoided knowledge of what would otherwise have been obvious to him.
The Federal Circuit held that a claim for inducement is viable even where the patentee has not produced direct evidence that the accused infringer actually knew of the patent-in-suit, and that this was such an instance. The Federal Circuit noted the following evidence that defendant deliberately disregarded a known risk that there was a patent:
1. Defendant purchased a plaintiff product in Hong Kong and copied all but the cosmetics.
2. While defendant hired an attorney to conduct a right-to-use study, it did not tell him that the product had been copied (noting that such failure would be highly suggestive of deliberate indifference in most circumstances).
3. Defendant’s did not point to any exculpatory evidence -- the lack of patent marking was rejected because defendant did not explain why it thought a product marketed in Hong Kong would have the U.S. patent number.
The Federal Circuit indicated that it was not setting the outer limit of what is sufficient constructive knowledge to constitute actual knowledge, but hinted that ignoring patent numbers marked on a product might be enough.

HYPOTHOSIZE A / REASONABLE ROYALTY / BUT DON'T SPECULATE

Resqnet.Com, Inc., v. Lansa, Inc., [2008-1365,-1366, 2009-1030] (February 5, 2010) [NEWMAN, LOURIE, and RADER] The Federal Circuit affirmed the finding that U.S. Patent No. 6,295,075 is valid and infringed, that U.S. Patent No. 5,831,608 is not infringed, reversed the imposition of sanctions, and vacated the damage award and remanded for recalculation.
DISCUSSION: Regarding the reasonable royalty damages, the Federal Circuit observed “a reasonable royalty analysis requires a court to hypothesize, not to speculate”. The Federal Circuit said that “the trial court must carefully tie proof of damages to the claimed invention’s footprint in the market place”. The licenses used by the plaintiff’s damages expert were silent about the patent in suit, and included rights beyond a license to the patent in suit. The Federal Circuit instructed that on remand the trial court should not rely on unrelated licenses to increase the reasonable royalty rate above rates more clearly linked to the economic demand for the claimed technology. The Federal Circuit reversed the award of sanctions as an abuse of discretion and untimely.