Precedential Patent Cases From the Federal Circuit in the Past Week
Teva This case is on remand from the Supreme Court's Teva v. Sandoz decision holding that the Circuit is to give deference to district courts' factual determinations. While the case is primarily a claim construction case, the ultimate issue here is whether the term "molecular weight" is indefinite. Applying the new "reasonable certainty" test from Nautilus v. Biosig, a divided panel finds the patent claims invalid as being unduly indefinite.
ePlus – In a 2014 decision the Circuit vacated an injunction, a contempt order and an $18 million penalty because the only claim found valid and infringed by the district court was subsequently determined to be invalid in a reexamination proceeding in the PTO. ePlus petitioned for rehearing en banc, which is now denied by a sharply divided Circuit. Dissents to the denial of the petition sharply attack the reasoning of the panel majority and of the majority of the Circuit denying rehearing en banc. In view of comments made in the dissents to the en banc petition, the majority of the original panel decides to reissue its 2014 opinion, providing additional comments.
Lighting Ballast - This decision is on remand from the Supreme Court following Teva, in which the Court said that while the ultimate question of the proper construction of a claim is a legal question to be reviewed de novo, there may be underlying subsidiary factual findings by the district court related to the extrinsic record that are to be reviewed for clear error, and not be given de novo review as they had previously under Cybor and the Circuit's en banc decision in Lighting Ballast. This is the first Circuit claim construction ruling in which Teva made a difference. According deference to the district court on factual determinations, the Circuit affirms the claim construction reached by the district court, thereby affirming validity and infringement and a $3 million jury award. In doing so the panel also discusses when arguments are waived and when they are not.
Gaymar Industries – Cincinnati Sub-Zero, the defendant/prevailing party in a patent infringement case, appealed the denial of its motion and motion for reconsideration for attorney fees under 35 U.S.C. § 285 pursuant to the Octane case. In holding that the case was not exceptional, the district court found that Gaymar's litigation position was not objectively baseless. The Circuit affirms that finding but reverses the finding that this was not an exceptional case insofar as that finding was based on CSZ's purported misconduct, which the panel determines was simply sloppy lawyering and not litigation misconduct.
Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc. , Fed. Cir. Case Nos. 2012-1567, -1568, -1569, -1570- (June 18, 2015) .
Sandoz submitted an ANDA to the FDA seeking approval to market a generic version of Teva's multiple sclerosis drug Copaxone®. Teva then sued Sandoz for patent infringement.
Claim 1 of the '808 patent recites a method of making a product called copolymer-1, which concludes with the statement: " having a molecular weight of about 5 to 9 kilodaltons." Copolymer-1 consists of four different amino acids combined in a certain ratio to make a polypeptide product. A sample of polymeric material like copolymer-1 typically consists of a mixture of individual polymer molecules that have varying molecular weights. There are three different measures of molecular weight relevant to this appeal: peak average molecular weight ( M p ), number average molecular weight ( M n ), and weight average molecular weight ( M w ). Each measure is calculated in a different manner. The claim does not specify which measure to use and in a typical polymer sample, M p , M n , and M w have different values.
The district court rejected the Appellants' argument that the term "molecular weight" was indefinite, accepting expert testimony that a person of ordinary skill would understand that "molecular weight" means M p in the context of the claimed invention. The Circuit reversed the district court's judgment with respect to the Group I claims, holding them indefinite. Teva filed a petition for certiorari, arguing that in holding the claims indefinite, the Circuit erred by giving no weight to the district court fact findings. The Supreme Court agreed, holding that "it was proper to treat the ultimate question of the proper construction of the patent as a question of law in the way that we treat document construction as a question of law." The reviewing court, however, should review subsidiary factual findings under the clearly erroneous standard.
The Court vacated the Circuit's decision, concluding that Teva identified at least one factual finding that the Circuit did not review for clear error. Appellants had argued that "molecular weight" could not mean M p because the molecular weight values in the Figure 1 legend did not match up with the peak values on the Figure 1 curves. The Supreme Court concluded that the district court's finding "about how a skilled artisan would understand the way in which a curve created from chromatogram data reflects molecular weights" was a factual finding, and instructed the Circuit that such fact findings should be reviewed for clear error.
While Teva was pending at the Supreme Court, the Court issued its opinion in Nautilus, rejecting the "not amenable to construction or insolubly ambiguous" standard for deciding indefiniteness under 35 U.S.C. § 112, ¶ 2. Those earlier standards had been applied in the Circuit's earlier Teva decision. The Supreme Court articulated the standard to be applied: "We hold that a patent is invalid for indefiniteness if its claims, read in light of the specification delineating the patent, and the prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention."
The Intrinsic Record Does Not Provide Sufficient Certainty Under Section 112
To determine whether the Group I claim at issue is indefinite, we look to the patent record—the claims, specification, and prosecution history—to ascertain if they convey to one of skill in the art with reasonable certainty the scope of the invention claimed. The district court's determination about how a skilled artisan would understand the way in which SEC generated chromatogram data reflects molecular weight is a question of fact. And we see no clear error in that fact finding—that one of skill in the art could read M p from a chromatogram without further calculation and that M w or M n would both require further calculations. While the argument of Teva's Dr. Grant, that the peak positions on the curves are within a margin of error is relatively cursory and unexplained, nonetheless we do not find the court's reliance on it clearly erroneous.
To the extent that Teva argues that the meaning of "molecular weight" in the context of patents-in-suit is itself a question of fact, it is wrong. A party cannot transform into a factual matter the internal coherence and context assessment of the patent simply by having an expert offer an opinion on it. The meaning one of skill in the art would attribute to the term molecular weight in light of its use in the claims, the disclosure in the specification, and the discussion of this term in the prosecution history is a question of law. Determining the significance of disclosures in the specification or prosecution history is also part of the legal analysis. Understandings that lie outside the patent documents about the meaning of terms to one of skill in the art or the science or state of the knowledge of one of skill in the art are factual issues.
To determine whether one of skill in the art would be reasonably certain that the claim's use of molecular weight is M p , we consider as well the prosecution history. Applicants can define (lexicography), explain, or disavow claim scope during prosecution. And whether their statements or disclaimers impact the meaning of a claim term in a given patent is a legal question, not a factual one. The parties do not point to any portion of the '808 patent's prosecution history that is relevant to the construction of "molecular weight." However, they point to, and the district court considered, statements about the meaning of "molecular weight" made during the prosecution of the '847 and '539 patents which are both continuations of the '808 patent. Such statements are legally relevant to the meaning one of skill in the art would attribute to the identical term in the '808 patent. In the prosecution of both patents, the examiner rejected the claims as indefinite because the term average molecular weight was meaningless without specifying whether M p , M n , or M w should be used. However, the patentee took inconsistent positions in response to indefiniteness rejections by the PTO. During the prosecution of the '847 patent the applicants successfully argued in response to an indefiniteness rejection that the term "molecular weight" was not indefinite because "one of ordinary skill in the art could understand that kilodalton units implies a weight average molecular weight," i.e., M w. During the prosecution of the '539 patent, the applicants responded to a nearly identical indefiniteness rejection to the term "molecular weight" by successfully arguing that a person "of ordinary skill in the art, upon reviewing the specification, would understand that 'average molecular weight' refers to the molecular weight at the peak of the molecular distribution curve in Figure 1," i.e., M p, .rather than M w.
To summarize, it is undisputed that "molecular weight" or average molecular weight can be ascertained by any of three possible measures: M p , M n , and M w. The claims do not indicate which measure to use. The specification never defines molecular weight or even mentions M p , M w , or M n. And the term "average molecular weight" does not have a plain meaning to one of skill in the art. The district court fact findings regarding how one of skill in the art would understand the way in which a curve created with chromatogram data reflects molecular weights was not clearly erroneous. Its fact findings about the additional calculations that would be required to determine M w or M n are not clearly erroneous. Its fact findings about how a skilled artisan would accept a curve "shift" when converting chromatogram data to a curve such as that illustrated in Figure 1 are not clearly erroneous. A skilled artisan, knowing a shift might occur, would still not be reasonably certain in light of the entire record as to which type of average was intended. During prosecution of the related '847 and '539 patents, the patentee in one instance stated that it was M w and in the other stated it was M p .
We hold that claim 1 is invalid for indefiniteness by clear and convincing evidence because read in light of the specification and the prosecution history, the patentee has failed to inform with reasonable certainty those skilled in the art about the scope of the invention. On this record, there is not reasonable certainty how molecular weight should be measured—and on this legal question—we reverse the district court.
Judge Mayer's Dissent
"In some instances, a factual finding may be close to dispositive of the ultimate legal question of the proper meaning of a claim term in the context of a patent." Teva. This is such a case. After carefully evaluating the testimony of the parties' experts, the district court made a factual finding that an artisan skilled in the art would have inferred that the term "molecular weight" referred to peak average molecular weight. The court further found that a person of ordinary skill in the art would have accepted a statement made by the patentee during prosecution of the '539 patent as proof of what was meant by the term "molecular weight." Because neither of these factual findings is clearly erroneous, we are not free to disregard or discount them in assessing whether the '808 patent withstands definiteness scrutiny. I therefore respectfully dissent.
ePlus, Inc. v. Lawson Software, Inc., Fed. Cir. Case 2013-1506, -1587 (June 18, 2015)
In a 2014 decision the Circuit vacated an injunction, a contempt order and an $18 million penalty because the only claim found valid and infringed by the district court was subsequently determined to be invalid in a reexamination proceeding in the PTO. That PTO decision was affirmed by the Circuit in a separate appeal. The 2014 decision was a split decision, with the majority basing its decision on the Fresenius case, which vacated a money award because a patent had, before the judgment was final, been determined by the PTO on reexamination to be invalid.
ePlus petitioned for rehearing en banc, which is now denied by a sharply divided Circuit. Dissents to the denial of the petition sharply attack the reasoning of the panel majority and the majority of the Circuit denying rehearing en banc. In view of comments made in the dissents to the en banc petition, the majority of the original panel decides to reissue its 2014 opinion, providing additional comments about the judgment not being final and regarding Fresenius. This reissued opinion and the dissenting opinions on rehearing reveal how sharply the Circuit is divided on whether subsequent determinations of invalidity by the PTO should affect prior court proceedings that were final in virtually all respects.
The Injunction Cannot Stand
The first question is whether the district court's injunction against Lawson must be set aside now that the PTO has cancelled the patent claim on which it is based. It is well established that an injunction must be set aside when the legal basis for it has ceased to exist. A court does not abdicate its power to revoke or modify its mandate, if satisfied that what it has been doing has been turned through changing circumstances into an instrument of wrong.
There is no longer any legal basis to enjoin Lawson's conduct based on rights that claim 26 previously conferred as those rights have ceased to exist. The PTO found claim 26 invalid and the Circuit affirmed that decision, so claim 26 no longer confers any rights that support an injunction.
Civil Contempt Remedies Must Also Be Set Aside
The second question is whether the civil contempt sanctions should also be lifted. It is well established that violations of an order are punishable as criminal contempt even though the order is set aside on appeal or though the basic action has become moot.
This case is not distinguishable on the ground that the injunction has been set aside as the result of the PTO proceeding rather than a court judgment. In Fresenius USA, Inc. v. Baxter International, Inc., the Circuit held that a non-final but two year old money judgment of damages for infringement must be set aside where the judgment rested on a patent claim that the PTO later cancelled. 721 F.3d 1330 (Fed. Cir. 2013). The Circuit found that the Fresenius judgment was not final because the scope of relief remained to be determined. Thus, the cancellation of the patent prior to a final judgment precluded the patentee from recovering damages in Fresenius. Similarly, here the civil contempt sanctions must be set aside.
The reissued majority opinion provided additional details regarding Fresenius but stressed that it was not extending Fresenius by applying Fresenius to civil contempt.
In dissent, Judge O'Malley argued that the facts of Fresenius were so different that Fresenius should not require that the contempt award be vacated, and that the majority was dramatically expanding Fresenius to apply in a civil contempt case. In her words: "[T]he majority has stretched the already concerning scope of Fresenius II to an even more untenable place."
On Petition for Rehearing En Banc
A majority of a sharply-decided Circuit denies the motion for rehearing en banc by appellee ePlus. The judges disagree on whether a PTO determination of invalidity prior to final judgment should eliminate a contempt award rendered prior to a determination of invalidity by the PTO that was affirmed by the Circuit.
The majority, per judge Dyk responds to points raised by the dissent to denial of rehearing en banc. First, the division between the majority and dissent is essentially about whether the applicable provisions of the injunction were final. As explained in the majority panel opinion, the injunction was not final at the time the claims were cancelled by the PTO, since we had remanded "for the district court to consider what changes are required to the terms of the injunction, consistent with this opinion." Review of the finality here is not necessary to secure or maintain uniformity of the court's decisions nor does it involve a question of exceptional importance. Fed. R. App. P. 35(a).
Second, assuming the injunction was not final, the majority opinion reflects nothing more than application of well-established law. It is clear from Worden v. Searls, 121 U.S. 14 (1887), that civil contempt sanctions for violating an injunction that is not final must be set aside where the underlying patent is invalidated. The right to fines "was, if it existed at all, founded on the right to the injunction, and that was founded on the validity of the patent." In her dissent to our denial of rehearing en banc, Judge Moore complains that this decision is "unfair, but does not explain why the judiciary should award compensatory damages for a non-final injunction based on an invalid patent. If the patent is indeed invalid, and shown to be so under proper procedures, there is no liability." Commil USA, LLC v. Cisco Sys., Inc., No. 13— 896, slip op. at 11 (May 26, 2015). In fact, without finality present here, it would be "manifestly unjust" to allow ePlus to recover from its invalid patent when the rest of the industry is not impeded by the patents.
Third, Judge Newman's dissent suggests that a PTO proceeding is "unraveling" a district court judgment, or a judicial ruling is being nullified by a subsequent decision of the PTO. This is incorrect. The cancellation at the PTO was finally affirmed by this court. As we have repeatedly held, when a challenger to a patent fails to meet its burden in district court, "the court will not find the patent 'valid,' only that 'the patent challenger did not carry the 'burden of establishing invalidity in the particular case before the court.'" In re Baxter Intl, Inc., 678 F.3d 1357 (Fed. Cir. 2012) Thus, a prior holding of validity is not necessarily inconsistent with a subsequent holding of invalidity.
Fourth, nothing in the record of this case suggests the accused infringer was trying to engage in any delay or abuse of process. Not even the patent holder in this appeal argued that there was any intentional delay or abuse of process by the accused infringer.
Judge NEWMAN's Dissent, Joined by Judges O'MALLEY and WALLACH
The panel majority holds that the district court's and the Circuit's judgments were not final, and on this ground rules that non-final judicial judgments are subject to overrule by subsequent holdings of the PTO. I start with the question of finality of the adjudications of infringement and contempt.
The issue before us is not whether claim 26 is enforceable against Lawson for future infringement, after the PTO invalidation; the issue is whether the earlier contempt order became retrospectively cancelled, as to past violations of the injunction. The panel so holds, by split decision.
In the panel's dissenting opinion, Judge O'Malley corrects the panel majority's error in describing the judicial rulings of infringement as "not final" rulings. From the district court judgment and JMOL, and through the Federal Circuit's affirmance, claim 26 was finally held infringed. Infringement was enjoined by permanent injunction, and the defendant's violation of the injunction was the subject of the civil contempt order.
The panel majority's ruling is at odds with all of the regional circuits. The regional circuits have dealt with issues of finality in a variety of circumstances; and the uniform rule is that a final judgment is final as to its subject matter, even if other items remain for consideration or for remand. The panel majority departs from extensive precedent in its position that the judgment of infringement was not final. This aspect alone warrants en banc correction.
Here the injunction was valid and final when the contempt occurred. An injunction may later be dissolved, but this does not erase past contempt. Today's decision places the Federal Circuit at odds with the procedural law of the nation. If special rules are to apply in patent cases, en banc assessment is required. I respectfully dissent from the court's refusal to rehear these issues en banc.
Judge MOORE's dissent, joined by judges O'MALLEY, REYNA and WALLACH
I agree with Judge O'Malley's dissent. The facts of this case conclusively establish that the injunction was final as to claim 26. For that reason, the district court's contempt order should have been affirmed.
The majority reaches too far back to unravel a long settled, fully resolved aspect of the case. In this case, for example, the Defendant had a full and fair opportunity to litigate validity. It lost and judgment was entered against it. An injunction was entered. The injunction was affirmed on appeal, at least as to claim 26. The district court then entered a contempt judgment against the Defendant for violating that injunction. After the verdict against it, the PTO cancelled claim 26. And this court has now held that the entire district court proceeding, including the contempt judgment can be unwound. I have no problem with the prospective elimination of an injunction following a determination that the patent at issue is invalid. But when a defendant has been adjudicated to be in contempt of a post-appealed final injunction, as in this case, subsequent invalidation of the patent cannot unravel the contempt judgment.
I do not agree with the majority that the injunction in this case was not final. More generally, there are problems with a system which permits defendants to snatch victory from the already closed jaws of defeat. Whether these problems are to be resolved by the Supreme Court through its precedent on finality or through Congress, this sort of gamesmanship ought to be curtailed.
Lighting Ballast Control LLC v. Philips Electronics N. Am. Corp., Fed. Cir. Case 2012-1014
(June 23, 2015)
Lighting Ballast's ‘529 patent discloses an electronic ballast with the ability to shield itself from destructive levels of current when a lamp is removed or becomes defective. The parties contested the construction of a number of terms of the claim, ULT argued that the claim was anticipated by the prior art, and that the court erred in denying its JMOL based on their being no support for the jury's determination of equivalence. Given that the Circuit now changes its determination on construction of "voltage source means" based upon the change in the standard of review under Teva, the construction of "voltage source means" will be the focus of this summary.
A. "VOLTAGE SOURCE MEANS"
Citing Rule 51 of the Federal Rules of Civil Procedure, Lighting Ballast first argues that ULT waived any argument regarding the proper construction of "voltage source means" by failing to raise the issue in either its pre- or post-verdict motions for judgment as a matter of law. Lighting Ballast also argues that Ortiz v. Jordan, 562 U.S. 180 (2011), prevents ULT from appealing the denial of ULT's summary judgment motion regarding indefiniteness because Ortiz forbids a party from appealing from an order denying summary judgment after a full trial on the merits.
As a preliminary matter, we reject Lighting Ballast's argument that ULT waived its argument regarding "voltage source means" because ULT was not required to object to claim construction under Rule 51 after ULT made its claim construction position clear to the court and the court rejected it. We disagree that Ortiz controls here. Ortiz addressed a circumstance in which a trial court denied summary judgment on grounds that material issues of fact prevented judgment as a matter of law. In those circumstances, the defendant remained obliged to present its argument to the trier of fact and failure to do so prevented raising it on appeal. While the third and final time the district court addressed the issue of indefiniteness based on the term "voltage source means" was in the context of summary judgment, the issue of whether a claim term is governed by § 112 ¶ 6 is a claim construction issue. And claim construction is an issue for the court, not the jury. When the district court denied ULT's motion for summary judgment, it did not conclude that issues of fact precluded judgment; it effectively entered judgment of validity to Lighting Ballast.
After rejecting ULT's argument that Lighting Ballast waived its right to appeal this issue, the panel turns to the construction of "voltage source means." The district court made findings of fact based on extrinsic evidence. Under the circumstances, it was not legal error for the court to rely on extrinsic evidence, because the extrinsic evidence was "not used to contradict claim meaning that is unambiguous in light of the intrinsic evidence." Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005).
For example, the district court determined that "while the 'voltage source means' term does not denote a specific structure, it is nevertheless understood by persons of skill in the lighting ballast design art to connote a class of structures, namely a rectifier, or structure to rectify the AC power line into a DC voltage for the DC input terminals." The court went on to note that the language following "voltage source means" in the claim—"providing a constant or variable magnitude DC voltage between the DC input terminals"—"when read by one familiar with the use and function of a lighting ballast, such as the one disclosed by the 529 Patent, [sic] would understand a rectifier is, at least in common uses, the only structure that would provide 'a constant or variable magnitude DC voltage'". The court further noted that "it is clear to one skilled in the art that to provide a DC voltage when the source is a power line, which provides an AC voltage, a structure to rectify the line is required and is clear from the language of the 'voltage source means' term."
We defer to these factual findings, absent a showing that they are clearly erroneous, and determine that the court's findings are supported by the record. Specifically, these factual findings are supported by the testimony of Dr. Roberts and Mr. Bobel. Mr. Bobel testified in his deposition that the "voltage source means" limitation connotes a rectifier to one skilled in the art. Mr. Bobel further explained that a battery could likewise provide the necessary DC supply voltage described in the patent. Similarly, Dr. Roberts explained that the "voltage source means" limitation suggests to him a sufficient structure, or class of structures, namely a rectifier if converting AC from a "power line source" to DC for a "DC supply voltage" or a battery if providing the DC supply voltage directly to the DC input terminals. This expert testimony supports a conclusion that the limitations convey a defined structure to one of ordinary skill in the art. Because the district court's factual findings demonstrate that the claims convey sufficient structure, the district court was correct to conclude that the term "voltage source means" is not governed by § 112 ¶ 6. As such, we affirm the district court's decision concerning "voltage source means."
B. "DIRECT CURRENT BLOCKING MEANS"
The district court construed "direct current blocking means" as requiring a capacitor or diode at every output terminal. Because JP '997 does not disclose a capacitor or diode at every output terminal, the district court concluded that a material fact existed as to whether JP '997 anticipates the claims. The parties disputed the issue at trial, and the jury returned a verdict of no anticipation.
The parties agree that the term "direct current blocking means" is governed by § 112 ¶ 6. The parties also agree that the corresponding structure is a collection of capacitors or diodes. The only point of disagreement is whether the structure requires a capacitor/diode coupled to every set of output terminals or only those through which the DC control signal passes and whether, under the correct construction, JP '997 anticipates the asserted claims.
ULT has failed to show reversible error in the court's construction of the term "direct current blocking means." Claim 1 recites "output terminals" and a "direct current blocking means coupled to the output terminals. " The plain language of the claims requires a direct current blocking means at every output terminal so the panel affirms that construction, presumably applying de novo review standard.
Under the court's construction, the jury's verdict is supported by substantial evidence. At trial, Lighting Ballast's Dr. Zane testified that JP '997 does not teach a DC blocking means attached to each of the output terminals. ULT failed to offer expert testimony regarding structural equivalency. As such, we hold that the court's construction of "direct current blocking means" was not erroneous, and that the jury's verdict of no anticipation is supported by substantial evidence.
C. "WHENEVER . . . DEFECTIVE"
We turn to the construction of " whenever at least one discharge lamp is removed from the output terminals or is defective." The "direct current blocking means" recited in claim 1 is "operable to stop flow of the control signal from the DC input terminals, whenever at least one gas discharge lamp . . . is defective." Relying on language in the specification, the court construed "defective" to mean "whenever the direct current path between [two terminals] is broken."
The panel holds that because the court's construction is supported by the intrinsic record the construction was "not erroneous." While not discussed in the opinion, presumably the panel was deciding this issue de novo because it was based on the intrinsic evidence.
D. "CONNECTED TO"
Before trial, the parties did not propose that the district court construe the term "connected to." ULT did not ask for its proposed construction until after trial. In resolving ULT's motion for JMOL, the district court construed the term to mean the same thing as "for connection to."
ULT argues that its accused products do not include "output terminals connected to the filaments" of a lamp as required by claims 1, 2, and 5 because the term means something different from "for connection to." Lighting Ballast argues that ULT waived this argument. We agree that ULT waived the argument because it did not seek that construction until after trial.
E. "CONTROL MEANS"
ULT argues that the district erred in denying JMOL on the basis of infringement of the "control means" limitation under the doctrine of equivalents. Under Fifth Circuit law, a district court's decision on a motion for JMOL is reviewed de novo, reapplying the JMOL standard. JMOL is appropriate when a party has been fully heard on an issue and there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue.
When final judgment is issued upon a jury verdict, this court can only look to whether there was substantial evidence to support the jury's verdict. We may not independently reweigh the evidence, as ULT asks this court to do. Lighting Ballast's expert, Dr. Victor Roberts, identified the structure of the accused products and testified that such structures were equivalent to the "control means" of the '529 patent for infringement purposes. Dr. Roberts testified in detail as to the way in which the accused products meet the "control means" limitation. We find that this evidence is sufficient to support the jury's verdict of infringement.
Comment: As noted above, this is the first Federal Circuit case in which Teva has actually made a difference in a claim construction ruling. There have been a number of cases in which the district court referred to extrinsic evidence and it was argued by one of the parties that this required deference to the lower court's ruling, but in every case the Circuit noted that the district court either did not rely on the extrinsic evidence, or that the intrinsic evidence was clear so no reference needed to or should be made to the extrinsic evidence. See, Enzo Biochem Inc. v. Applera Corp., 780 F3d 1149 (Fed. Cir. 2015); In re Papst Licensing Digital Camera Patent Litigation, 778 F3d 1255 (Fed. Cir. 2015); Info-Hold, Inc. v. Applied Media Technologies Corp., 783 F3d 1262 (Fed. Cir. 2015); and Shire Development, LLC v. Watson Pharm. Inc., 2015 US App. LEXIS 9250 (Fed. Cir. June 3, 2015).
Gaymar Industries, Inc. v. Cincinnati Sub-Zero Products, Inc. , Fed. Cir. Case 2014-1174
(June 25, 2015)
Gaymar owns a '510 patent directed to a patient temperature control system, including a blanket that can conductively warm or cool the patient. Gaymar sued Cincinnati Sub-Zero Products ("CSZ") under the patent. Gaymar moved for a preliminary injunction against CSZ and CSZ filed for inter partes reexamination, asserting that all 134 claims of the '510 patent were invalid. The PTO granted the reexamination request and rejected all claims of the '510 patent as anticipated or obvious over prior art.
Gaymar filed an express abandonment of the ‘510 patent, and CSZ moved for attorney fees under 35 U.S.C. § 285, alleging that Gaymar's litigation position was frivolous and that it had engaged in litigation misconduct. The district court denied CSZ's motion because CSZ had not proven by clear and convincing evidence that Gaymar's claims were objectively baseless, and that Gaymar's intentionally misleading discovery response about prior art, by itself, was insufficient to render the case exceptional. Significantly, the court also noted that it would not recommend an award of attorney fees even if the case was exceptional, due to litigation misconduct by CSZ, including misrepresentations to the court and shifting legal theories.
Following the decision in Octane, CSZ moved for reconsideration of its attorney fees motion. The district court concluded that Octane did not require a different result and denied reconsideration. CSZ appealed the denial of its § 285 motion, challenging the district court's findings that Gaymar's litigation position was not objectively baseless, and that CSZ engaged in litigation misconduct.
Gaymar's Claims were not Objectively Baseless
On appeal, CSZ first challenges the finding that Gaymar's litigation position was not objectively baseless, relying on the fact that Gaymar lost at the PTO and on factors such as Gaymar's pre-suit knowledge of the prior art and failure to withdraw its preliminary injunction motion during the pendency of the reexamination proceeding.
However, as the Supreme Court made clear in Octane, fee awards are not to be used as a penalty for failure to win a patent infringement suit, and Gaymar's pre-suit knowledge of the prior art and failure to withdraw its preliminary injunction motion, are factors relevant only to the subjective inquiry. Accordingly, CSZ failed to establish that the court erred in its determination that Gaymar's claims were not objectively baseless. Therefore the panel affirms the determination as to the objective reasonableness of Gaymar's litigation position.
CSZ's Sloppy Lawyering Does Not Rise to the Level of Litigation Misconduct
Second, CSZ challenges the refusal to award fees based on the court's finding that "given CSZ's own litigation misconduct, it does not have ‘clean hands' sufficient to render this an ‘exceptional case.'"
Section 285 provides: "The court in exceptional cases may award reasonable attorney fees to the prevailing party." The Supreme Court in Octane rejected the two-pronged standard articulated in Brooks Furniture Manufacturing, Inc. v. Dutailier International, Inc., 393 F.3d 1378 (Fed. Cir. 2005), and held that "district courts may determine whether a case is 'exceptional' in the case-by-case exercise of their discretion, considering the totality of the circumstances." The conduct of the parties is a relevant factor under Octane's totality-of-the-circumstances inquiry, including the conduct of the party seeking fees under § 285.
In denying CSZ's motion for attorneys' fees, the district court based its decision on a finding that CSZ lacked clean hands as a result of what the court characterized as litigation misconduct. After reviewing the record in detail, the panel finds that certain of CSZ's arguments could be properly characterized as overstatements, but none of these amounted to misrepresentation or litigation misconduct. The panel determines that CSZ's conduct — whether considered in isolation or in the aggregate—amounted to sloppy argument, at worst, and while such sloppiness on the part of litigants is unfortunately all too common, the panel reiterates the fact that it does not amount to misrepresentation or misconduct.
Because none of CSZ's conduct rose to the level of litigation misconduct, the panel determines that the district court committed clear error, and reverses the denial of CSZ's motion for attorneys' fees, remanding the case for reconsideration on the totality of the circumstances under Octane.
- Alexandra BodnarAssociate
- Peter HeuserShareholder