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Fresh From the Bench: Recent Patent Cases From the Federal Circuit

July 21, 2014

Overview

H-W Technology – The Circuit affirms a ruling that (1) a claim corrected by a certificate of correction cannot be asserted where the infringement began prior to issuance of the certificate, and (2) an apparatus claim that includes method limitations is invalid as indefinite.

Medisim – The Circuit vacates denial of JMOL as to anticipation because defendant failed to move after presentation of the evidence, but affirms the grant of JMOL on an unjust enrichment claim and the grant of a new trial on anticipation.

H-W Technology, L.C. v. Overstock.com, Inc., Fed. Cir. Case 2014-1054, 1055 (July 11, 2014)

H-W sued Overstock, alleging that Overstock's smartphone application infringed its patent directed to an apparatus and method for performing contextual searches on an Internet Protocol (IP) Phone. According to the specification, an IP Phone is a telephone that can operate and execute voice communication in the same way as conventional telephones either via a Plain Old Telephone System (POTS) or an IP network.

Claim Construction is Affirmed

H-W appeals the district court's construction of the claim terms "user of said phone" and "said user" to mean "a consumer operating the IP Phone," arguing that the correct construction is "a person or thing that uses an IP phone." According to the panel, the only significant evidence H-W supplies in support of this contention, other than conclusory and undeveloped citations to the specification, is a general purpose dictionary definition of "user" as "a person or thing that uses something." In contrast, the district court's construction—that "user of said phone" is limited to a human consumer— finds plenty of support in the claims, specification, and extrinsic evidence. The panel therefore affirms the district court's construction of claim 9.

The District Court Properly did not Amend Claim 9

H-W also appeals the district court's summary judgment holding that claim 9 is indefinite and thus invalid. When the PTO allowed patent claim 9, it included the phrase "wherein said user completes a transaction with at least one of said merchants listed without the need to generate a voice call," but when the PTO issued the patent, the quoted language was inadvertently omitted. H-W argues that the district court itself had authority to correct the error in claim 9.

According to the panel, a district court can correct a patent only if, among other things, "the error is evident from the face of the patent." Here, the error is not evident from the face of the patent since claim 9 reads coherently without the missing limitation. Nothing in the surrounding claim language indicates that the limitation was missing. Although other claims do contain the missing limitation, the inclusion of that limitation in one claim does not necessitate, or even fairly indicate, that the limitation should be included in all other claims. H-W next argues that the omitted language is in the specification, but "no-contact transactions" appear to be optional premium listing services. The optional nature of such services negates any argument that such a limitation in the claim is implied as necessary to the invention, and would be an improper importation of a limitation from the specification into the claims. Because evidence of error in the prosecution history alone is insufficient to allow the district court to correct an error that is not evident on the face of the patent, the Circuit affirms the district court's refusal to amend the claim.

The District Court Correctly Did Not Consider theCertificate of Correction

H-W also argues that the district court "failed to factor the certificate of correction in its determination that claim 9 is indefinite and invalid." Certificates of correction are governed by 35 U.S.C. § 254, which states that whenever there is a mistake in a patent through the fault of the PTO, the Director may issue a certificate of correction, and every such patent "shall have the same effect and operation in law on the trial of actions for causes thereafter arising as if the same had been originally issued in such corrected form." (Emphasis added in opinion.) Based on the plain language of the statute, the certificate of correction is only effective for causes of action arising after it was issued. Here, H-W filed this suit before the certificate of correction issued, and neither party has argued that this suit involves causes of action arising after the certificate of correction issued. Thus, the district court was correct not to consider the certificate of correction when considering the validity of claim 9.

H-W Cannot Assert Claim 9 Uncorrected

Having concluded that the district court properly did not correct the patent claims itself or apply the certificate of correction to this lawsuit, the question remains whether H-W should be permitted to assert claim 9 uncorrected. At oral argument, H-W appeared to concede that it should not be permitted to do so. The panel agrees. When, as here, a claim issues that omits a material limitation, and such omission is not evident on the face of the patent, the patentee cannot assert that claim until it has been corrected by the PTO. To hold otherwise would potentially permit patentees to assert claims that they never asked for nor rightly attained. Such a result would be inequitable and undermine the notice function of patents.

The district court was correct to conclude that H-W cannot assert either the original or corrected versions of claim 9 in this lawsuit. Therefore, the judgment of the district court in favor of Overstock and against H-W is correct. Still, in order to clarify that claim 9, as corrected, has not yet been litigated and, thus, has not been held invalid, the panel struck the portion of the judgment that holds claim 9 invalid.

Claim 17 is Indefinite as Including Two Different Statutory Classes of Invention

Finally, H-W appeals the district court's holding that claim 17 is indefinite and invalid. Claim 17 is reproduced below:

17. A tangible computer readable medium encoded with computer program for performing con- textual searches on an Internet Phone (IP) phone comprising the steps of:

receiving a command to perform a contextual search;

receiving search criteria from a user of said IP phone;

submitting said search criteria to a server coupled to said IP phone; and

receiving from said server a list of merchants matching said search criteria and information regarding each of said merchants in said list;

wherein said user completes a transaction with at least one of said merchants listed without the need to generate a voice call;

wherein said information received by said user comprises a variety of offers, wherein said user selects one of said variety of offers associated with said one of said merchants listed, wherein said selected offer is transmitted to said one of said merchants listed electronically; and

wherein said user's contact and payment information is not transmitted to said one of said merchants listed, wherein said user's contact and payment information is available to said one of said merchants listed.

The district court held that the italicized limitations were method limitations and that apparatus claim 17 thus combines two statutory classes of invention. At oral argument, H-W essentially conceded that if the Circuit affirmed the district court's disputed constructions, claim 17 would indeed contain method limitations and thus be indefinite. Here, the disputed language ("wherein said user completes" and "wherein said user selects.") is nearly identical to the disputed language in similar cases decided by the Circuit. As in those cases, it is unclear here when infringement would occur. Claim 17 is thus indefinite, and the district court's invalidity holding is affirmed.

Medisim Ltd. V. Bestmed, LLC, Fed. Cir. Case 2013-1451 (July 14, 2014)

Medisim filed suit against BestMed, accusing BestMed of infringing its '668 patent directed to non-invasive instant thermometers by selling so-called K-Jump thermometers and of benefitting from unjust enrichment. Before the case was submitted to the jury, both parties made several motions requesting JMOL under Federal Rule of Civil Procedure 50(a). In opposing Medisim's motion for JMOL of no anticipation, BestMed's counsel stated:

"On anticipation, I submit that the jury can readily find that the FHT-1 product, Medisim's own product, is anticipatory. There's clear and convincing evidence, we submit, on that issue. Also Medisim's witnesses' testimony supports that position. But, again, it's definitely something for the jury."

In addition, BestMed expressly moved for JMOL under Rule 50(a) of no unjust enrichment at the close of Medisim's case-in-chief, generally contending that "[t]here is no evidence of unjust enrichment" and particularly challenging Medisim's evidence on each element of the claim.

The district court denied all JMOL motions, and the jury found the '668 patent to be not invalid and infringed. The jury awarded Medisim $1.2 million in patent infringement damages and $2.29 million in damages for its unjust enrichment claim.

Following the jury verdict, BestMed moved for JMOL of anticipation and no unjust enrichment under Rule 50(b). The district court granted those motions, overturning the verdict and finding that the asserted claims of the '668 patent are anticipated by the earlier FHT-1 thermometer. Further, the district court found that Medisim's unjust enrichment claim was not grounded in the record, as "there was no evidence to support a finding that BestMed received an incremental benefit over that compensable by the patent laws." The district court also granted BestMed a new trial on anticipation, "conditioned on an appellate court determining that BestMed failed to preserve its right to bring a post-trial motion for JMOL." The district court's ruling vacated Medisim's entire damages award, and Medisim appealed.

Federal Rule of Civil Procedure Rule 50(a) allows a party to challenge the sufficiency of the evidence prior to submission of the case to the jury. Rule 50(b), by contrast, sets forth the procedural requirements for renewing a sufficiency of the evidence challenge after the jury verdict. In the past the Circuit has found that parties forfeited the right to move under Rule 50(b) by failing to first properly move under Rule 50(a).

Forfeiture of JMOL on Anticipation

Medisim first argues that BestMed failed to move for JMOL on anticipation under Rule 50(a), so it was foreclosed from doing so under Rule 50(b). Therefore, Medisim claims that the district court should have refrained from ruling on anticipation after the jury verdict under Rule 50(b).

While BestMed concedes that counsel's statement was "not a model of clarity," it argues that Medisim was on notice of BestMed's position. However, in an opinion authored by Chief Judge Prost, the panel concludes that BestMed forfeited its right to move for JMOL on anticipation. The statement that BestMed now relies on as evidence of a motion for JMOL actually indicates the opposite— BestMed's counsel stated that anticipation was "definitely something for the jury." Further, BestMed's counsel made this statement in opposition to Medisim's motion for JMOL under Rule 50(a); BestMed never moved on its own for JMOL on anticipation before the case was submitted to the jury. Therefore, the panel concludes that the district court erred in ruling on any validity issues after the jury verdict under Rule 50(b).

No Forfeiture of JMOL on Unjust Enrichment

Turning to Medisim's procedural challenge to the district court's grant of JMOL on unjust enrichment, Medisim argues that BestMed forfeited its right to move for JMOL under Rule 50(b) when it failed to properly move for JMOL under Rule 50(a). The panel disagrees, finding that BestMed expressly moved for JMOL of no unjust enrichment at the close of Medisim's case-in-chief, generally contending that "[t]here is no evidence of unjust enrichment" and particularly challenging Medisim's evidence on each element of the claim. The panel apparently agreed with BestMed's argument that the district court cut BestMed's counsel off and denied the motion, and when BestMed's counsel tried to renew BestMed's JMOL motions later, the district court barred any further discussion, saying "you preserved the record." The panel therefore concludes that BestMed did not forfeit its right to move for JMOL on unjust enrichment under Rule 50(b) because it adequately made such a motion under Rule 50(a).

Grant of JMOL on Unjust Enrichment

According to the panel, unjust enrichment requires "1) that the defendant benefited; 2) at the plaintiff's expense; and 3) that equity and good conscience require restitution." Medisim argues that its unjust enrichment claim is based on the enrichment that BestMed obtained from selling thermometers developed through the unauthorized use of Medisim's proprietary, non-public information, to Medisim's detriment. Specifically, Medisim argues that it developed a successful water bath testing procedure, which was a prerequisite to selling thermometers in the United States. But according to the panel, during trial, Medisim failed to present any evidence to support a finding that BestMed received an incremental benefit from Medisim's allegedly proprietary water bath testing procedure over that compensable by the patent laws. It grouped together its patent and non-patent damages claims, relying on Best- Med's profits from all of the accused products. Medisim offered no evidence to show why BestMed had reason to think that Medisim's procedures for water bath testing were confidential or otherwise proprietary. Thus, even when viewing all the evidence in the light most favorable to Medisim, the panel concludes that equity and good conscience do not require restitution.

Conditional Grant of New Trial on Anticipation

Finally, the panel turned to the district court's conditional grant of a new trial. A court may set aside the verdict and order a new trial even if no motion for JMOL was made under Rule 50(a). Below, the district court did not elaborate on its reasons for granting BestMed's motion for a new trial, conditioned on the Circuit's determination that BestMed failed to preserve its right to bring a post-trial motion for JMOL on anticipation. Instead, it made its ruling in a footnote.

The panel rejects Medisim's argument that in addressing the request for a new trial only in a footnote, the district court did not provide any legal or evidentiary grounds to support the conditional grant. Medisim claims that in its brevity, the district court abused its discretion. However, the panel finds that, given the context and the surrounding discussion, the district court's reasoning is clear enough to pass Rule 50(c)(1) muster. In the section of its opinion where the district court conditionally granted the new trial, the district court calls BestMed's anticipation argument overwhelmingly strong. The panel then pointed to the testimony and documentary evidence that supports the district court's conditional granting of a new trial, and ruled that the court did not abuse its discretion in granting BestMed's motion for a new trial.

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