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Precedential Patent Cases From the Federal Circuit in ‎the Past Week

May 11, 2015

Overview

Sukumar –The Circuit affirms summary judgment that Sukumar has not suffered "competitive injury" necessary to have standing to assert a false marking claim under 35 U.S.C. § 292(b) of the AIA. The panel also affirms summary judgment dismissing Sukumar's state law claims.

Takeda –A divided panel affirms the denial of a preliminary injunction attempting to halt the introduction of Hikma's Mitigare product for the treatment of gout. Hikma did not seek FDA approval to market Mitigare for treatment of acute gout flares, so Mitigare's label stated that Mitigare is "indicated for prophylaxis" and that "if you have a gout flare while taking Mitigare, tell your hea lthcare provider." The majority rejects Takeda's argument that this latter statement induced infringement even though the physician would likely tell the patient to use the Mitigare product in a manner that infringed the Takeda patents.

Eon –A patent directed to interactive TV is invalid as indefinite since the specification fails to disclose an algorithm to provide structure for various computer-implemented means-plus-function elements. The panel rejects the patentee's argument that the " Katzexception" applies. In re Katzheld that a standard microprocessor can provide the structure for software patents if they describe functions that a computer can perform without special programming.

Biogen –The panel holds that the AIA eliminated appellate jurisdiction of district courts as to interferences commenced after September 15, 2012. The PTAB's decision on the merits of the interference is affirmed.

Sukumar v. Nautilus, Inc., Fed. Cir. Case 2014-1205 (May 4, 2015)

In 2004, Sukumar founded Southern California Stroke Rehabilitation Associates ("SCSRA"), which was to be involved in opening and running senior rehabilitation facilities. In those facilities Sukumar was to use modified Nautilus fitness machines, which included patent markings. According to Sukumar, SCSRA attempted to negotiate a patent license from Nautilus but SCSRA had no business plan, no employees, no office space, and no prototype designs.

The district court granted Sukumar's motion for partial summary judgment that the Nautilus machines were falsely marked. After the district court's partial summary judgment, Sukumar created a business plan for selling fitness equipment, hired a design firm to create initial renderings of a fitness machine, and consulted with engineers in the industry. At least as of August 2013, Sukumar was in talks to acquire land for offices and a manufacturing facility.

In the meantime, the law concerning who could bring an action for false marking had changed. On September 16, 2011, the AIA was signed into law, amending 35 U.S.C. § 292 to eliminate qui tam false marking suits and require that an entity had to suffer a "competitive injury" to bring a private right of action to enforce the false marking statute. Soon after, the Circuit held that this amendment applied retroactively to a suit pending at the time the AIA was enacted. Despite this the district court granted Nautilus' motion for summary judgment, ruling that Sukumar had not proven "competitive injury."

The "Competitive Injury" Requirement

Title 35 section 292(a) prohibits, in part, "marking upon . . . in connection with any unpatented article, the word 'patent' or any word or number importing that the same is patented, for the purpose of deceiving the public." Section 292(b) provides a private right of action to enforce § 292(a) to any "person who has suffered a competitive injury as a result of a violation of this section."

Sukumar was not selling products in competition with Nautilus at the time this suit was filed. This case thus presents the question of whether (or to what extent) an entity that has not entered the relevant market can suffer "competitive injury."

The text of the statute and the legislative history are inconclusive as to the meaning of "competitive injury." However, "injury to competition" is a common concept in antitrust law. In that context, preventing market entry unquestionably qualifies as "injury to competition." In addition, the Ninth Circuit has stated that "agreements that foreclose competitors from entering or competing in a market can injure competition by reducing the competitive threat those competitors would pose." Similarly, the Ninth Circuit has reasoned that tying arrangements are forbidden on the theory that, if the seller has market power over the tying product, the seller can leverage this market power through tying arrangements to exclude other sellers of the tied product.

From the above review of the statutory text, legislative history, analogous areas of law, and policy rationale, the panel concludes that § 292(b) extends standing to sue for a violation of § 292(a) to some potential competitors. A potential competitor may suffer competitive injury if it has attempted to enter the market. An attempt is made up of two components: (1) intent to enter the market with a reasonable possibility of success, and (2) an action to enter the market. And, for the sake of completeness, an entity has standing under § 292(b) if it can demonstrate competitive injury that was caused by the alleged false marking.

Application to Sukumar

a. Intent to enter the market

Sukumar alleges that he developed the intent to compete with Nautilus in the mid-to late-1990s. Nautilus responds that Sukumar never intended to sell fitness machines in competition with Nautilus, but instead only intended to operate senior rehabilitation centers. The evidence supports Nautilus. In 1998 and 1999, Sukumar placed orders for custom Nautilus fitness machines with certain modifications but there is no evidence that Sukumar intended to produce equipment in competition with Nautilus.

It is unclear what, if any, business activities SCSRA undertook with respect to the fitness machines market over the next half-decade following its formation in 2004. Both parties direct the court to a 1999 litigation settlement proposed by Sukumar as evidence of Sukumar's intent during this time. In this settlement proposal, Sukumar attempted to negotiate a license to Nautilus patents. But the proposed patent license extended only for Sukumar "to make and have made for use exclusively in Sukumar owned rehabilitation centers equipment and parts that are covered by a claim of Nautilus' patent rights."

The bulk of Sukumar's testimony confirms that Sukumar's intent was always to use modified fitness machines in senior rehabilitation and spa centers, and not to compete with Nautilus. Still, on summary judgment, the panel notes that it must view the evidence in the light most favorable to Sukumar. Therefore, the panel proceeds to consider the second component of an attempt to enter the market: whether Sukumar took action to enter the market.

b. Action to enter the market

The panel concludes that, even if Sukumar subjectively intended to enter the market for fitness machines, he took insufficient action to pursue that intent. Thus, no genuine issue of material fact remains—Sukumar did not attempt to compete with Nautilus, so Sukumar did not suffer a competitive injury. Sukumar had little engineering knowledge of fitness machines or business experience in the fitness machine market. Sukumar contends that, to gain familiarity with Nautilus fitness machines, he purchased over 100 exercise machines from Nautilus. But Sukumar's alleged attempt to compete with Nautilus ends here. The undisputed evidence establishes that, at the time Sukumar filed suit, Sukumar had not taken sufficient action to enter the market for fitness machines. Therefore, Sukumar was not engaged in competition with Nautilus and did not suffer a competitive injury, and summary judgment for Nautilus was appropriate because Sukumar lacks standing to bring a claim for false marking under § 292.

State Law Claims

Sukumar also appeals the grant of summary judgment for Nautilus on Sukumar's unfair competition claims. Sukumar contends that the court applied the wrong causation standard to the state law claims but the panel disagrees. As to Sukumar's argument that Nautilus' false marking caused his alleged damages, Sukumar does not present sufficient evidence. As discussed above, the court properly found that Sukumar's intent was to open senior rehabilitation and spa centers, not to compete with Nautilus.

Takeda Pharm. U.S.A. Inc. v. West-Ward Pharm. Corp., Fed Cir. Case 2015-1139-1142 (May 6, 2015)

Takeda owns patents that cover methods of administering colchicine products to treat gout. Colchicine itself, which has been used for centuries, is not covered by Takeda's patents. The patents recite methods of treating acute gout by administering 1.2 mg of oral colchicine at the onset of the flare, followed by 0.6 mg of colchicine about one hour later. Takeda sells the colchicine product under the brand name Colcrys.

On September 26, 2014, the FDA granted Hikma approval to market its Mitigare colchicine capsule for prophylaxic treatment of gout. On October 3, 2014, Hikma launched Mitigare, and Takeda filed suit, asserting induced infringement based on Hikma's labeling of the Mitigare product. Hikma planned on launching an authorized generic version of Mitigare as early as October 10, 2014. After granting a TRO, the court denied Takeda's motion for preliminary injunction on the grounds that Takeda did not meet its burden of showing a likelihood of success on the merits for its induced infringement claims, nor had it shown that it would suffer irreparable injury.

Discussion

Denial of a preliminary injunction is reviewed for abuse of discretion. A party seeking a preliminary injunction must establish that it is likely to succeed on the merits, that it is likely to suffer irreparable harm in the absence of relief, that the balance of equities is in its favor, and that an injunction is in the public interest.

The Hatch-Waxman Act allows generic manufacturers to rely on certain streamlined FDA approval processes by which generic drug manufacturers can bring products to market without submitting all of the drug and clinical data ordinarily required. In particular, an applicant seeking approval to market a generic version of a drug may file either an ANDA or a "505(b)(2) application," sometimes called a "paper NDA." An ANDA allows applicants seeking approval for generic versions of existing drugs to rely on the safety and efficacy information for an approved drug listed in the Approved Drug Products with Therapeutic Equivalence Evaluations, or the "Orange Book." A paper NDA allows applicants seeking approval for a new drug or a change to an approved drug to rely on existing FDA findings of safety and effectiveness.

Both the ANDA and paper NDA pathways generally require applicants to submit one of several kinds of patent certifications, including a "Paragraph IV" certification that the relevant patents are either invalid or not infringed, which may in turn trigger patent litigation under the artificial act of infringement created by 35 U.S.C. § 271 (e) (2) (A).

Here Colcrys was an FDA-approved drug, and Hikma elected to file a paper NDA. Hikma did not, however, file a Paragraph IV certification with respect to Takeda's patents because it relied on prior FDA findings of safety and efficacy concerning colchicine, and did not seek FDA approval for a use covered by Takeda's patents. As Takeda concedes, administering colchicine for prophylaxis of gout flares is not covered by Takeda's asserted patents, except when it involves concomitant administration with certain other drugs.

Takeda has not Shown a Likelihood of Proving Induced Infringement

Since Hikma did not seek FDA approval to market Mitigare for treatment of acute gout flares, Mitigare's label stated that Mitigare is "indicated for prophylaxis" and that the "safety and effectiveness of it for acute treatment of gout flares during prophylaxis has not been studied." The label also said that "if you have a gout flare while taking Mitigare, tell your healthcare provider." Takeda argued that this latter statement induced infringement because, in the case of the patient taking Mitigare for prophylaxis, the physician would likely tell the patient to use the Mitigare product to treat the acute flare in a manner that infringed the Takeda patents. The district court concluded that the latter instruction was not sufficient to establish induced infringement.

"Whoever actively induces infringement of a patent shall be liable as an infringer." 35 U.S.C. § 271(b). "[The] sale of a lawful product by lawful means, with the knowledge that an unaffiliated, third party may infringe, cannot, in and of itself, constitute inducement of infringement." The accused infringer must have "knowingly aided and abetted" direct infringement. Warner-Lambert Co. v. Apotex Corp., 316 F.3d 1348 (Fed. Cir. 2003).

As the Supreme Court held in the analogous context of copyright infringement, there is no indirect infringement "when a defendant merely sells a commercial product suitable for some lawful use." Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005). Infringement only exists where there is evidence that goes beyond a product's characteristics or the knowledge that it may be put to infringing uses. Inducement can be found where there is evidence of active steps taken to encourage direct infringement, which can in turn be found in advertising an infringing use or instructing how to engage in an infringing use. But such instructions need to evidence intent to encourageinfringement. The question is not just whether instructions describe the infringing mode, but whether the instructions teach an infringing use of the device such thatwe are willing to infer from those instructions an affirmative intent to infringe the patent.

These principles are applicable where, as here, it is alleged that the drug label induces infringement by physicians. The mere existence of direct infringement by physicians, while necessary to find liability for induced infringement, is not sufficient for inducement. This requirement of inducing acts is particularly important in the Hatch-Waxman Act context because the statute was designed to enable the sale of drugs for nonpatented uses even though this would result in some off-label infringing uses. Takeda concedes that mere knowledge of off-label infringing uses of Mitigare's product would not establish inducement. Similarly insufficient is Hikma's knowledge that colchicine is used to treat acute gout flares. The FDA has previously told healthcare providers to prescribe Colcrys for acute gout flares, and the FDA told Hikma that "it may be natural for the provider to use Mitigare for acute treatment." So too the guidelines from the American College of Rheumatology that recommend prescribing Colcrys for acute gout flares are irrelevant to the question of inducement. All of this, without more, is mere knowledge of infringing uses and does not establish inducement.

But Takeda argues that Mitigare's label, though indicated only for prophylaxis of gout, induces infringement by stating that "[i]f you have a gout flare while taking Mitigare, tell your healthcare provider," which will "inevitably" lead to physicians to advise patients taking Mitigare for prophylaxis to simply increase their dose of Mitigare to treat acute gout flares, and that Hikma was aware of or willfully blind to this possibility. However, the panel rules that, given the statutory scheme explained above, vague label language cannot be combined with speculation about how physicians may act to find inducement. This would seem to too easily transform that which we have held is "legally irrelevant" — mere knowledge of infringing uses—into induced infringement. Speculation or even proof that some, or even many, doctors would prescribe Mitigare for acute flares is hardly evidence of inevitability. This evidence does not show anything more than that there may be some infringing uses of Mitigare.

Judge Newman's dissent

Judge Newman dissents against what she sees as a ruling that the provider of a known drug product, with knowledge that it is likely to be used in direct infringement, can never be liable for induced infringement. These are fact-specific circumstances, and are not amenable to final disposition at a preliminary injunction hearing. The question requires trial on the facts of this case.

Comment:Hikma's marketing scheme is reminiscent of the introduction of the birth control pill in the late 1950's. "The pill" was approved for severe menstrual cramps but not for birth control, which was very controversial and actually illegal in some states, but the label carried a warning that, while taking the pill, women were not likely to be able to become pregnant. Almost immediately, an unusually large number of American women came down with severe menstrual cramps, and saw their doctors to get a prescription.



Eon Corp. IP Holdings LLC v. AT&T Mobility LLC, Fed. Cir. Case 2014-1392-1393 (May 6, 2015)

The asserted patent is directed to software that operates in tandem with a television to interconnect various interactive features of the television. The software allows actions such as impulse purchase transactions with immediate payment, audience participation voting, and sorting television programs by theme. EON filed an action against smartphone manufacturers, cellular network providers, and smartphone content providers ("FLO TV case"). EON sued several others in a separate action ("AT&T case"), and the cases were consolidated. Following two reexaminations, the court granted summary judgment to the FLO TV defendants, ruling that all claims of the patent were indefinite.

Discussion

The grant of summary judgment of indefiniteness is reviewed de novo. The court's determination of the structure that corresponds to a particular means-plus-function limitation is a matter of claim construction. Subsidiary factual determinations are reviewed for clear error. Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831, 836 (2015); see also Biosig Instruments, Inc. v. Nautilus, Inc., No. 2012-1289, slip op. at 5 (Fed. Cir. Apr. 27, 2015); ("Findings of fact . . . must not be set aside unless clearly erroneous . . .").

The parties agree that the claim terms at issue are all means-plus-function terms governed by 35 U.S.C. § 112 ¶ 6. The parties also agree that the claimed functions are all performed by computer software. It is well-established that the corresponding structure for a function performed by a software algorithm is the algorithm itself. WMS Gaming, Inc. v. Int'l Game Tech.,184 F.3d 1339 (Fed. Cir.1999). In cases involving a computer-implemented invention in which the inventor has invoked means-plus-function claiming, the structure disclosed in the specification must be more than a general purpose computer or microprocessor. Aristocrat Techs. Austl. Pty Ltd. v. Int'l Game Tech., 521 F.3d 1328 (Fed. Cir. 2008).

A. The KatzException

The only structure in the ‘757 patent in suit is a microprocessor, and no algorithm is disclosed. EON relies on an exception to the algorithm rule created in In re Katz Interactive Call Processing Patent Litigation, 639 F.3d 1303 (Fed. Cir. 2011). Katzheld that a standard microprocessor can serve as sufficient structure for functions that can be achieved by any general purpose computer without special programming. In Katz, claim terms involving basic "processing," "receiving," and "storing" functions were held to be not necessarily indefinite because a general purpose computer need not be specially programmed to perform the recited function. However, other claim terms described functions that required special programming.

The Circuit has since analyzed the "narrow" Katzexception, finding that it did not apply. See Ergo Licensing, LLC v. CareFusion 303, Inc., 673 F.3d 1361 (Fed. Cir. 2012). The Ergocourt explained that "it is only in the rare circumstances where any general-purpose computer without any special programming can perform the function that an algorithm need not be disclosed." The Circuit found that an algorithm was needed to lend sufficient structure to the terms at issue because "the 'control means' at issue in this case cannot be performed by a general-purpose computer without any special programming. The function of 'controlling the adjusting means' requires more than merely plugging in a general purpose computer."

EON asserts that the functions claimed in its patent do not involve "special programming"—and thus fall within the Katzexception—because they are relatively simple to implement. However, as we stated in Katz, a microprocessor can serve as structure for a computer-implemented function only where the claimed function is "coextensive" with a microprocessor itself. Examples of such coextensive functions are "receiving" data, "storing" data, and "processing" data—the only three functions on which the Katzcourt vacated the district court's decision that the patent was indefinite.

"Special programming" does not denote a level of complexity. On this point, the district court erred in holding that "special programming" does not encompass commercially available off-the-shelf software. To the contrary, and as originally described in Katz, "special programming" includes any functionality that is not "coextensive" with a microprocessor or general purpose computer. In other words—to use the language of In re Alappat, 33 F3d 1526 (Fed. Cir. 1994) —the general purpose computer becomes a special purpose computer when loaded with the special programming, so a general purpose computer or microprocessor no longer lends sufficient structure to the claim. Therefore, the Katzexception is a necessary corollary to the general rule stated in WMS Gamingand further elaborated in Aristocratand other later cases. A microprocessor or general purpose computer lends sufficient structure only to basic functions of a microprocessor. All other computer-implemented functions require disclosure of an algorithm.

B. Role of the Person of Ordinary Skill in the Art

EON also argues that a microprocessor can provide sufficient structure for a software function if a person of ordinary skill in the art could implement the software function. We have repeatedly and unequivocally rejected this argument: a person of ordinary skill in the art plays no role whatsoever in determining whether an algorithm must be disclosed as structure for a functional claim element.

Circuit case law regarding special purpose computer-implemented means-plus-functions claims is divided into two distinct groups: First, cases in which the specification discloses no algorithm; and second, cases in which the specification does disclose an algorithm but a defendant contends that disclosure is inadequate. Where the specification discloses no algorithm, the skilled artisan's knowledge is irrelevant. Where the specification discloses an algorithm that the accused infringer contends is inadequate, we judge the disclosure's sufficiency based on the skilled artisan's perspective. The parties agree that the '757 patent's specification discloses no algorithms, so this case falls in the first category, in which the skilled artisan's knowledge is irrelevant.

EON's argument conflates the definiteness requirement of section 112, paragraphs 2 and 6, and the enablement requirement of paragraph 1. Enablement of a device requires only the disclosure of sufficient information so that a person of ordinary skill in the art could make and use the device. A section 112, paragraph 6 disclosure, however, serves the different purpose of limiting the scope of the claim to the particular structure disclosed, together with equivalents. Thus, the question before us is whether the specification contains a sufficient description of the "corresponding structure" to satisfy paragraph 6, not whether a person of skill in the art could devise some means to carry out the recited function.

C. Application of the Algorithm Requirement to this Case

In light of the foregoing discussion, resolution of this case is straightforward. The panel sees no clear error in any of the district court's factual findings that each of the eight claim terms recited complicated, customized computer software, nor any error in the court's ultimate conclusion of indefiniteness.

Significantly, EON does not contend on appeal that the terms at issue recite functions that are coextensive with a microprocessor. EON also does not differentiate between any of the claim terms in its argument. In fact, EON cites to testimony from its expert that a person skilled in the art would need to consult algorithms outside the specification to implement the claimed functions. Similarly, based on expert testimony, the district court found that "special code would have to be written in order to accomplish the claimed functionality." As discussed above, this finding proves more than is necessary, as the defendants must only show by clear and convincing evidence that the terms at issue do not recite basic functions of a microprocessor. Therefore, the '757 patent's disclosure of a microprocessor does not lend sufficient structure to the means-plus-function terms at issue, and the '757 patent's claims are indefinite.

Biogen MA, Inc. v. Japanese Found. For Cancer Research, Fed. Cir. Case 2014-1525 (May 7, 2015)

Beginning in 1983, a series of interferences were declared between Fiers and Haruo Sugano, Masami Muramatsu, and Tadatsugu Taniguchi (collectively, "Sugano") relating to patents directed to the treatment of multiple sclerosis. In a first interference the Board of Patent Appeals and Interferences awarded priority to Sugano, and the Circuit affirmed. In a second interference, declared in 2009, the Board also awarded priority to Sugano, and Fiers did not appeal. Finally, in 2013 the Board declared a third interference but ordered Fiers to show cause as to why Fires should not be estopped from proceeding, given that Fiers lost the prior interferences and the subject matter was the same as in the prior interferences. Ruling that Fiers failed to discharge that burden, the Board held that Fiers was estopped from continuing the interference by reason of the two earlier interference proceedings.

Biogen, a successor in interest, filed a civil action in district court under pre-AIA 35 U.S.C. § 146 to set aside the Board's determination. On May 22, 2014, the district court granted successor JFC's motion to dismiss, holding that the AIA had eliminated §146 jurisdiction to review interferences filed after September 15, 2012. The district court transferred the case to the Circuit so that we could review the Board's decision under pre-AIA 35 U.S.C. § 141.

Only the Federal Circuit has Jurisdiction to Hear a Post-Sept. 12, 2012 Interference Appeal

The panel first holds that it has jurisdiction to determine whether the district court has subject matter jurisdiction under pre-AIA 35 U.S.C. § 146. In this context, Congress has provided two mutually exclusive avenues of review under § 146 and § 141, so the question of our jurisdiction and the district court's jurisdiction are different sides of the same coin. In short, we have jurisdiction under § 141 as a result of the transfer if § 146 review was unavailable, but we lack jurisdiction if this case was properly brought to the district court under § 146. We thus must determine if the district court indeed lacked jurisdiction under § 146 in order to determine whether we lack jurisdiction and should retransfer the case.

The issue here is whether the AIA, enacted on September 16, 2011, eliminated the district court's § 146 jurisdiction to review decisions from interference proceedings declared after September 15, 2012. Ultimately, the panel concludes that statutory provisions in the AIA as amended require that for interferences declared after September 15, 2012, § 146 review is not available. In short, because the AIA provided that only pre-AIA § 141 review in the Circuit would be available for interferences declared after September 15, 2012, and the third interference here was declared July 16, 2013, the district court properly found that it lacked subject matter jurisdiction. It follows that the Circuit has jurisdiction to hear Biogen's appeal pursuant to § 141.

Interference Estoppel Applies in this Case

The panel then turns to the merits of Biogen's appeal of the Board's judgment against Fiers in the third appeal. The Board's judgment was based on Fiers' failure to meet its burden in responding to the order to show cause why it should not be estopped from continuing with the interference, given that it had lost two prior interferences.

Interference estoppel by judgment applies where a losing party in a previous interference between the same parties tries to patent a claim not patentably distinct from the counts in issue in that prior interference. The panel agrees with the Board that Fiers failed to meet his burden to show patentable distinctness to avoid interference estoppel by judgment.

The panel thus sees no error in the Board's conclusion that Fiers submitted no relevant evidence on patentable distinctness and was thus estopped from continuing with the interference.

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