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Precedential Patent Cases From the Federal Circuit in ‎the Past Week ‎

September 4, 2015


Dow Chemical – Dow filed suit against Nova, and a ‎jury found the asserted claims to be infringed and not invalid. The Circuit affirmed. The district court subsequently conducted a bench trial and awarded supplemental damages for ‎the supplemental damages period from the time of trial through the expiration date of the patents. Nova appealed. Subsequently, the Supreme Court ‎decided Nautilus v. Biosig, altering the standard for ‎indefiniteness. In the present appeal, the panel rules that the intervening change in the law of indefiniteness causes it to change its decision and find the claims indefinite. This changed ruling resulting from a change in the law fits within an ‎exception to the doctrines of claim preclusion and issue preclusion, so the panel reverses the award of supplemental damages.

Dome Patent Dome owns a patent for making contact lens material. On reexamination, the PTO found that the claimed method at issue was obvious. Because the reexamination was filed prior to November 29, 1999, an appeal was permitted to any a district court. The District Court for the District of Columbia agreed with the PTO that the claimed method was unpatentable. On appeal, Dome challenged both the standard of review and the ultimate conclusion on obviousness, but the panel affirms as to both. This "preponderance of the evidence" standard and not the "clear and convincing standard" would presumably apply to all such appeals from the PTO to the Circuit.

The Dow Chemical Co. v. Nova Chemicals Corp., Fed. Cir. Case 2014-1431, -1462
(August 28, 2015)

Dow filed suit against NOVA, alleging infringement of claims directed to ethylene polymer compositions (a type of plastic) with improved modulus, yield strength, impact strength, and tear strength. These polymers can be made into films that can be made thinner without losing strength. The independent claims require "a slope of strain hardening coefficient greater than or equal to 1.3." NOVA argues that the patents are indefinite because they fail to teach a person having ordinary skill in the art how to measure the "slope of strain hardening," which is required to calculate the strain hardening coefficient.

A jury found that NOVA infringed the claims, that the patents were not invalid for indefiniteness, and awarded Dow $62 million. NOVA appealed, and in that appeal the Circuit held that the patents were not indefinite. In so holding, the Circuit applied the law as then established by pre- Nautilus precedent, including Exxon Research & Engineering Co. v. United States, 265 F.3d 1371 (Fed. Cir. 2001).

On remand, the district court held a bench trial on supplemental damages for the period between the date of the complaint and the expiration date of the patents, and granted $30 million of supplemental damages in the form of lost profits and reasonable royalties. NOVA appealed on April 23, 2014 and while its appeal was pending, the Supreme Court decided Nautilus where the Court abrogated our previous inquiry into whether the claims were "amenable to construction" or "insolubly ambiguous." Under the new standard, "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." On appeal, NOVA argues that (1) the supplemental damages award should be vacated because the patents-in-suit are invalid for indefiniteness after the Supreme Court's decision in Nautilus or (2) in the alternative, the supplemental damages award was not supported by the evidence.

Claim Preclusion and Issue Preclusion Do Not Apply When There Has Been a Change in the Law

Dow argues that we are bound by our decision in the previous appeal—an appeal from a final judgment under Fed. R. Civ. P. 54(b)—that the claims were not indefinite. While a judgment entered under Rule 54(b) is a final judgment, that final judgment cannot have any greater effect than any other final judgment. The earlier appeal was from the entry of judgment in the jury verdict for the period preceding the trial, while the current appeal is from the supplemental damages judgment for the period following the trial. An award of supplemental damages is designed to compensate the patentee "for periods of infringement not considered by the jury," and necessarily implicates patent validity. In order to prevail on a claim for supplemental damages, a patentee must establish infringement for the supplemental damages period. If "an act that would have been an infringement or an inducement to infringe pertains to a patent that is shown to be invalid, there is no patent to be infringed." Commil USA, LLC v. Cisco Sys., Inc., 135 S. Ct. 1920 (2015).

The doctrine of claim preclusion does not apply as between the claims for the first and second damages periods. It is well-established that, as to claims for continuing conduct after the complaint is filed, each period constitutes a separate claim. This rule applies to patent infringement claims. As we explained just last year,

traditional notions of claim preclusion do not apply when a patentee accuses new acts of infringement, i.e., post-final judgment, in a second suit – even where the products are the same in both suits. Such claims are barred under general preclusion principles only to the extent they can be barred by issue preclusion, with its attendant limitations.

Brain Life, LLC v Elekta Inc., 746 F.3d 1045 (Fed. Cir. 2014). Here, the bulk of the supplemental damages accrued after the Rule 54(b) judgment, and it is clear that claim preclusion also does not apply to damages accruing after the filing of the complaint and not the subject of the first judgment. All supplemental damages here accrued after the filing of the complaint.

While claim preclusion does not apply, ordinarily issue preclusion (or law of the case) would bar relitigation in the supplemental damages period of issues (such as validity) that were resolved as to the earlier time periods. But both doctrines are subject to an exception—when governing law is changed by a later authoritative decision. With respect to law of the case, "perhaps the most obvious justifications for departing arise when there has been an intervening change of law outside the confines of the particular case." The exception applies even if the issue was resolved on appeal in an earlier stage of the proceeding. Indeed, the premise of the exception in the appellate context is that there was such an earlier resolution. But the exception of course does not apply if the proceeding has reached the stage of final judgment. Here, the supplemental damages proceeding had not been concluded at the time of Nautilus.

Similarly, issue preclusion does not apply where "a new determination is warranted in order to take account of an intervening change in the applicable legal context or otherwise to avoid inequitable administration of the laws." Restatement (Second) of Judgments § 28(2) (1982). Therefore, a court is not bound by a previous decision where there is a change in the controlling precedent.

The change in law exception applies whether the change in law occurs while the case is before the district court or while the case is on appeal. Three conditions must be satisfied to reopen a previous decision under the change of law exception for both law of the case and issue preclusion. First, the governing law must have been altered. Second, the decision sought to be reopened must have applied the old law. Third, the change in law must compel a different result under the facts of the particular case. Each of these requirements was satisfied here.

First, there can be no serious question that Nautilus changed the law of indefiniteness. Second, there is also no question that our original decision applied pre- Nautilus law. Third, as we now explain, our original decision would have been different under the new Nautilus standard.

The Claims Fail to Inform Those in the Art About the Scope of the Invention

The claim term at issue here provides for "a slope of strain hardening coefficient greater than or equal to 1.3." NOVA argues that the term "slope of strain hardening coefficient," is indefinite because the patent fails to teach with reasonable certainty where and how the "slope of strain hardening" should be measured.

The question is whether the existence of multiple ‎methods leading to different results without guidance in ‎the patent or the prosecution history as to which method ‎should be used renders the claims indefinite. Before ‎ Nautilus, a claim was not indefinite if someone skilled in ‎the art could arrive at a method and practice that method. ‎ Exxon, 265 F.3d at 1379. In our previous opinion, relying ‎on this standard, we held that the claims were not indefinite, holding that "the mere fact that the slope may be ‎measured in more than one way does not make the claims ‎of the patent invalid." This was ‎so because Dow's expert Dr. Hsiao, a person skilled in the ‎art, had developed a method for measuring maximum ‎slope. ‎

Under Nautilus this is no longer sufficient. "[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." 134 S. Ct. at 2124. Here the required guidance is not provided by the claims, specification, and prosecution history.

Dr. Hsiao's chosen method was not even an established method but rather one developed for this particular case. As we held in Interval Licensing, a claim term is indefinite if it "leave[s] the skilled artisan to consult the 'unpredictable vagaries of any one person's opinion." 766 F.3d at 1374 (quoting Datamize, LLC v. Plumtree Software, Inc., 417 F.3d 1342, 1350 (Fed. Cir. 2005)). The claims here are invalid as indefinite, and the award of supplemental damages must be reversed.

Comment: My summary has focused on the claim preclusion and issue preclusion discussion and not so much on indefiniteness since that holding seemed to be pretty clear once the Nautilus standard was applied. But the most interesting aspect of the case is not even mentioned by the Circuit because it was not appealed by Nova. Nova did not question the earlier $62 million judgment on the damages, which was also based on the pre- Nautilus law. However, because the damages calculations were not complete, under the rationale of the ePLUS and Fresenius cases, it would have seemed that Dow might have been able to get the earlier judgment dismissed. In those cases, because the damages or injunction determinations were not completely final (despite the existence of final judgments in each case), the Circuit threw out an injunction, a contempt award and a damages award due to the PTO subsequently finding the patents-in-suit invalid. It would seem that Dow would have had at least as good of a shot of getting the $62 million thrown out due to a change in the law that clearly would have changed the result in the first appeal.

Dome Patent L.P. v. Michelle K. Lee, Fed. Cir. Case 2014-1673
(September 3, 2015)

In December 1997, Dome filed suit against six makers of contact lenses for alleged infringement of the '042 patent. Shortly after, one defendant requested ex parte reexamination of the '042 patent. In June 1999, the PTO ordered reexamination and, as a result, the district court stayed litigation pending a final determination in the reexamination proceeding. The PTO confirmed the patentability of claims 2, 3, and 4 of the '042 patent, but it found claim 1 obvious under 35 U.S.C. § 103.

Dome then filed suit in September 2007 against the PTO in the District Court for the District of Columbia under 35 U.S.C. §§ 145 and 306, requesting that the district court enjoin the PTO from cancelling claim 1 of the '042 patent. Following a bench trial, the district court held claim 1 of the '042 patent invalid as obvious under 35 U.S.C. § 103 and entered judgment in favor of the PTO.

The District Court Properly Held that the Correct Standard of Proof for a Reexam is the Preponderance of the Evidence and Not Clear and Convincing Evidence

Before reaching Dome's appeal of the obviousness conclusion, we first address Dome's allegation that the district court erred by only requiring the PTO to show that claim 1 of the '042 patent is obvious by a preponderance of the evidence, rather than by clear and convincing evidence. We conclude that the district court correctly applied the preponderance of the evidence standard.

Dome's appeal arises from an ex parte reexamination. Ordinarily, the PTO in such a proceeding must establish by a preponderance of the evidence that the reexamined claims are not patentable. Rambus Inc. v. Rea, 731 F.3d 1248 (Fed. Cir. 2013). If an ex parte reexamination results in the claims being rejected as unpatentable, the decision can be appealed directly to this court. See 35 U.S.C. § 141. Alternatively, for ex parte reexaminations filed before November 29, 1999, a complaint can be filed in district court against the PTO. See 35 U.S.C. § 145. The thrust of such a complaint is that the decision of the board is erroneous on the facts, the law, or both. Indeed, the board's decision is the jurisdictional base for the suit. It is in essence a suit to set aside the final decision of the board.

Accordingly, if the PTO decides after an ex parte reexamination that a preponderance of the evidence establishes the claimed subject matter is not patentable, § 145 authorizes the district court to review whether that final decision is correct. The § 145 action in such a case does not concern the different question of whether, as part of a defense to an infringement action, clear and convincing evidence establishes that an issued and asserted patent should be held invalid.

Citing 35 U.S.C. § 282 and Microsoft Corp. v. i4i Ltd. Partnership, 131 S. Ct. 2238 (2011), Dome argues that the district court erred by refusing to hold the PTO to the clear and convincing evidence standard of proof. According to Dome, the presumption of validity in § 282 applies to its claimed invention because the district court action concerns a claim that the PTO previously allowed to be patented. Accordingly, Dome argues the Supreme Court's holding that "§ 282 requires an invalidity defense to be proved by clear and convincing evidence," 131 S. Ct. at 2242, also applies in Dome's § 145 action.

The § 145 action before the district court did not involve a defense to a charge of infringement of an issued patent. Section 282 therefore does not apply in this instance. The district court here was reviewing the PTO's reexamination of claimed subject matter, and its final determination that the subject matter is not patentable, to ascertain whether Dome was entitled to receive a patent. Only if the district court found in favor of Dome would the PTO be authorized to issue a patent. And only after the patent issued would it be entitled to the presumption of validity under § 282 and, consequently, could not be held invalid absent clear and convincing evidence.

The clear and convincing evidence standard in the litigation context stems from our suggestion that the party challenging a patent in court bears the added burden of overcoming the deference that is due to a qualified government agency presumed to have done its job. Sciele Pharma Inc. v. Lupin Ltd., 684 F.3d 1253 (Fed. Cir. 2012). But in reexamination proceedings, a preponderance of the evidence must show nonpatentability before the PTO may reject the claims of a patent application. This standard is substantially lower than in a civil case, and there is no presumption of validity. In re Swanson, 540 F.3d 1368 (Fed. Cir. 2008).

When the PTO institutes ex parte reexamination, it reopens prosecution to determine whether the claimed subject matter should have been allowed in the first place. At that point, there is no need to presume that the PTO had "done its job" in the previous examination. Accordingly, the presumption of validity is no longer applicable.

Our conclusion aligns with the purpose of the reexamination process, which includes allowing the PTO to take a second look at patents thought doubtful. In re Etter, 756 F.2d at 857. In a very real sense, the intent underlying reexamination is to start over in the PTO. We would hinder this intent if we required the district court here to presume that the reexamined claim is valid because of the PTO's previous determination and, consequently, to impose a burden to defend its own subsequent reexamination decision by clear and convincing evidence. Thus, the district court did not err by requiring the PTO to show by a preponderance of the evidence that the reexamined claim is obvious.

The Circuit then evaluated the district court's decision that the claims at issue would have been obvious to one with ordinary skill in the art, applying the preponderance of the evidence standard, and affirmed that decision.

Comment: This case was decided under ‎35 U.S.C. §145, which permitted appeals to any district court as to reexaminations ‎filed prior to November 29, 1999. Now, pursuant to ‎35 U.S.C. §141, ‎those appeals, and appeals of post grant and inter partes reviews, are directly to the Federal Circuit‎.


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