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

November 4, 2013

Overview

We have always internally circulated comments regarding recent Federal Circuit cases but we thought we'd start sharing those comments with our clients. Therefore, every week or so, depending upon the importance of the cases being decided, we will provide you with summaries of recent Federal Circuit decisions. We will try to focus on cases that are likely to be important to your business and your patent portfolio. If you have any questions about the information provided in these case summaries or wish to discuss them further, please contact the Schwabe patent attorney with whom you currently work, or contact Peter Heuser at 503-796-2424, or pheuser@schwabe.com.

LifeScan Scotland, Ltd. v. Shasta Techs., LLC, Fed. Cir., No. 2013-1271, 11/4/13

The Federal Circuit ruled that a patented method covering LifeScan's blood glucose system is exhausted by the company's sale—and often giveaway—of its meter, allowing patients with diabetes to use competitors' test strips without infringing the patent in suit. Exhaustion of a patented method claim is governed by Quanta Computer Inc. v. LG Elecs. ‎Inc., 128 S. Ct. 2109 (2008). ‎Quanta held that the critical issue, whether a method or product patent is ‎involved, is whether the product ‘substantially embodies the patent'—i.e., whether the additional ‎steps needed to complete the invention from the product are themselves ‘inventive' or ‎‎‘noninventive.' The present case thus rested on whether LifeScan's sale or free distribution of its meters exhausted its ‎patent rights in that the meter substantially embodies the patent. Although ‎Quanta noted that the product at issue in that case "had no reasonable noninfringing uses," ‎LifeScan could not avoid exhaustion by saying that Shasta could design around the patent in a ‎noninfringing way. Quanta held only that exhaustion might not apply if LifeScan itself ‎intended a noninfringing use. ‎Under Quanta, the court said, exhaustion applies if the meters "control" and "carry out" ‎the inventive functions of the patent. After a review of the patent and the prosecution history, the majority concluded that the meters do so, because "the meter's error-‎detecting functions are its inventive concept," and not the test strips.

The Federal Circuit recently held that "[t]he same principle is equally applicable to method claims," the majority said, in Keurig, Inc., v. Sturm Foods, Inc., No. 13- 1072 (Fed. Cir. Oct. 17, 2013), which held that sale of a coffee brewer exhausted rights with respect to alleging infringement against suppliers of the disposable coffee cartridges that fit in the brewer.

Reversing the district court's preliminary injunction, the Circuit panel rejected the argument that giving away the blood glucose meter avoids exhaustion because no consideration accrues to the patentee. Although Shasta does not actually perform the patented method, it does sell a product particularly designed to perform that method and also encourages its customers to perform the method. Because 28 USC 1292(a)(1) permits an immediate appeal of an injunction ruling, Shasta was able to immediately appeal the granting of the injunction.

Integrated Tech. Corp. v. Rudolph Techs., Inc., Fed. Cir., No. 2012-1593, 11/4/13

A patent applicant narrowed a "contact" limitation in an originally-rejected patent claim and is now barred from asserting infringement under the doctrine of equivalents by products lacking physical contact. This is true even though the patentee would not have had to add this limitation to avoid the prior art. Reversing a district court judgment, a unanimous panel left little room for patentees who narrowed claims during patent prosecution to capture later-developed equivalents.

ITC owns a patent on equipment for inspecting probes that test chips on a semiconductor wafer for misalignment. The patented system includes a viewing window, and the issue was whether the system forced the probe tip into contact with the window before digital images were taken. ITC's original patent claims recited "a window with a flat surface contacted by said probe tip," which the examiner rejected as indefinite and anticipated. ITC amended the claim to specify that "said probe tip is driven in contact with said window." Prior to 2007, defendant Rudolph's product required physical contact between the probe tips and the window, but its current "no-touch products" take the image when the probe tips are spaced approximately five microns above the window. ITC claimed that both versions infringed its patent, literally as to the product that required physical contact, and under the doctrine of equivalence as to the no-touch products. The district court granted summary judgment of literal infringement as to the pre-2007 products, and a jury found infringement by the no-touch products under the doctrine of equivalents.

The Circuit focused on the issues related to the doctrine of equivalents. The panel first stated that the presumption of surrendering subject matter for purposes of the doctrine of equivalents applied in this case "because the amendment narrowed the scope of the original claim in response to patentability rejections." The panel then identified three exceptions to the presumption as laid out in Festo v. Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722 (2002) :

if "the rationale underlying the amendment bears no more than a tangential relation to the equivalent in question";

if the equivalent was unforeseen when the application was filed; or

for another reason indicating that the patentee could not have described the equivalent.

"The tangential relation exception is ‘very narrow,'" and it does not apply here because the anticipatory prior art used the same "contacted by the probe" language that was in Integrated's original claim. Integrated argued that it did not need to surrender the absence of physical contact to overcome the anticipation rejection. However, according to the panel, "The dispositive fact is that ITC chose to do so."

The panel further agreed with Rudolph that the original claim language claimed broadly enough to cover its no-touch products. Consequently, any argument that Rudolph's solution was objectively unforeseeable fails, regardless of whether Rudolph developed the alleged equivalent later.

Therefore, the court reversed denial of Rudolph's motion for judgment as a matter of law that the no-touch products do not infringe under the doctrine of equivalents.

Randall MFG v. Rea (Fed. Cir. 2013) (Inter Partes Reexamination No. 95/000,326)

FG Products owns a patent directed to a moveable bulkhead for partitioning cargo space in a shipping container. In 2007 Randall requested inter partes reexamination of the patent. During reexamination the examiner found the claims obvious based upon a combination of three prior art references. The Board reversed, finding that someone in the art "would not reasonably have appreciated" that the prior art could be combined in the manner suggested. The Circuit vacated, finding that the Board's approach failed because it narrowly focused on the cited references and did not follow the "flexible analysis" of KSR. Specifically, the panel required an analysis that reads the prior art in context, taking account of "demands known to the design community," "the background knowledge possessed by a person having ordinary skill in the art," and "the inferences and creative steps that a person of ordinary skill in the art would employ."

In KSR, the Supreme Court criticized a rigid approach to determining obviousness based on the disclosures of individual prior-art references, with little recourse to the knowledge, creativity, and common sense that an ordinarily skilled artisan would have brought to bear when considering combinations or modifications. Rejecting the Board's focus on individual documents, the Circuit required an analysis that reads the prior art in context, taking account of "demands known to the design community," "the background knowledge possessed by a person having ordinary skill in the art," and "the inferences and creative steps that a person of ordinary skill in the art would employ." By narrowly focusing on the prior-art references cited by the Examiner and ignoring the additional record evidence Randall cited to demonstrate the knowledge and perspective of one of ordinary skill in the art, the Board failed to account for critical background information that could easily explain why an ordinarily skilled artisan would have been motivated to combine or modify the cited references to arrive at the claimed inventions. As KSR established, the knowledge of such an artisan is part of the store of public knowledge that must be consulted when considering whether a claimed invention would have been obvious. There are no apparent functional concerns that would have discouraged a designer of ordinary skill from attempting the combination. The evidence strongly supports the notion that the bulkhead design FG claimed was nothing more than the "combination of familiar elements according to known methods,"" 'each performing the same function it had been known to perform,' " "yield[ing] predictable results." KSR (quoting Sakraida v. Ag Pro, Inc., 425 U.S. 273 (1976)).

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