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Precedential Patent Cases From the Federal Circuit in the Past Week

November 3, 2015

Overview

Atlas v. Medtronic Atlas sued Medtronic and St. Jude Medical for infringement of a patent directed to the way medical devices such as Medtronic's defibrillators and insulin pumps communicate with other components positioned in or on the patient's body. In the Medtronic case the panel affirms the construction of a portion of the claim and based on that, affirms summary judgment of noninfringement. However, the Circuit reverses the district court's construction of another portion of the claim and therefore reverses summary judgement of no anticipation or obviousness. The reversal is based on disagreement with what the district court thought was the plain meaning of the claim language. The panel does not agree that the language is so plain, particularly taking into consideration the context of the language in the claim.

Before reaching these issues the panel first rules, applying Federal Circuit rather than regional circuit law, that it has jurisdiction to consider the appeal where, as here, there was "manufactured finality" by the parties who agreed to dismiss without prejudice counterclaims as to other claims in the case.

Atlas v. St. Jude In this case the panel reverses summary judgment of noninfringement where the district court went beyond its own claim constructions to rule on summary judgment that the St. Jude products did not infringe.

Tesco The issue here is whether the district court's critical language about misrepresentations to the court by counsel continues to involve a case or controversy worthy of appellate jurisdiction even though the underlying case has been settled and there was no real sanction imposed against the attorneys. Tesco's patent infringement suitwas dismissed with prejudice pursuant to the district court's inherent authority to sanction counsel's misrepresentations relating to a prior art brochure that had not been produced. During pendency of the appeal the parties settled, with everyone, including the attorneys, signing releases.

The panel majority dismisses the appeal and rules that there is no case or controversy despite the attorneys' argument that the harm to their reputation in the district court's findings and opinions justifies jurisdiction over the appeal. In dissent, Judge Newman argues that precedent from other circuits and the fundamentals of due process require that the Circuit hear this appeal and remand if necessary, noting that the attorneys should have an opportunity to present mitigating evidence that the district court refused to admit, and clear their names.

Atlas IP, LLC v. Medtronic, Inc. , Fed. Cir. Case 2015-1071, -1105, (October 29, 2015)

Atlas sued Medtronic for infringement of a patent directed to a protocol for controlling wireless network communications between a hub and remotes, alleging that products for monitoring a patient's condition infringed its patent. The district court granted summary judgment of non-infringement and summary judgment rejecting anticipation and obviousness challenges. Atlas appeals the non-infringement ruling, which we affirm. Medtronic cross-appeals the validity ruling, which we reverse.

The district court granted Medtronic's motion for summary judgment of noninfringement as to claim 21, the only claim at issue on appeal. The district court's ruling rested on the "in advance" portion of the claim construction. The parties disputed whether, under the "in advance" construction, the endpoint of a communication cycle must be communicated to the remotes before the cycle begins, as Medtronic argued, or merely before the remotes transmit to the hub, as Atlas argued. The court concluded that the accused devices do not infringe "under either party's construction."

The court granted Atlas's motion for summary judgment rejecting Medtronic's anticipation and obviousness challenges to claim 21. The court rested its holding on a new claim construction of language in clause [b] of claim 21: "communication cycles, each of which has intervals during which the hub and the remotes transmit and receive frames." The court held: "The plain meaning necessitates the hub and the remotes transmit and receive frames during each communication cycle, not that the hub and the remotes simply may do so during a communication cycle."

The Circuit has Jurisdiction to Hear the Appeal

Here, the district court entered judgment on the merits rejecting all of Atlas's claims in its complaint and entered judgment rejecting one of Medtronic's invalidity counterclaims. Then, based on an agreement between the parties, it dismissed without prejudice Medtronic's other counterclaims, which asserted invalidity of the other claims. For this court to have jurisdiction in this appeal, we must find that there is a final judgment before us, no other basis of appellate jurisdiction being invoked or apparent.

The legal question is whether the district court's complete adjudication of some claims followed by a consented-to dismissal without prejudice of the remaining claims—what has been called "manufactured finality"— produces a final decision under § 1295(a)(1). The answer hinges on whether we apply our law or the law of the regional circuit, here the Eleventh Circuit. Under Eleventh Circuit law, the district court's decision strongly appears not to be final. But our court has held that a final judgment exists when a district court fully adjudicates some claims, and by consent, dismisses all remaining counterclaims without prejudice.

We apply our own law to issues unique to patent law and regional circuit law to issues unrelated to patent law. The statute governing our appellate jurisdiction, § 1295, including in particular the language giving us jurisdiction over an appeal from a "final decision" in a patent case, § 1295(a)(1), is unique to this court. Although our interpretation of "final decision" is informed by similar language in § 1291, which governs other courts of appeals, § 1295 sets out the exclusive jurisdiction of our circuit, and only our circuit. We therefore apply our own law to issues of finality under § 1295(a)(1). For that reason, the district court's order dismissing all pending counterclaims without prejudice, after fully adjudicating some of the claims, is final, and we have jurisdiction here under § 1295(a)(1).

Construction of "Establishing" and "Transmitting" is Affirmed

Atlas does not dispute that the judgment of noninfringement of claim 21 must be affirmed if, under the "establishing" and "transmitting" limitations of clauses [b] and [c], the endpoint of the communication cycle must be communicated to the remotes before any remote transmits frames to the hub. Infringement therefore turns entirely on a claim-construction issue. Atlas asserts that the ordinary meaning of the word "establish" in the two limitations at issue is merely "initiate," so that the hub need not define the start and duration of communication cycles and their intervals, let alone transmit that definitional information. But, although "establish" might mean "initiate" in some contexts, it must mean more in this context, which is all about setting a schedule for various communication devices to follow where coordination is important. A principal definition of "establish" that most naturally fits this context is: "set up (an organization, system, or set of rules) on a firm or permanent basis." The New Oxford American Dictionary 580 (2001). And although it is not clear that Atlas argues otherwise independently of its "establish" contention, the context also makes clear that the schedule thus established must be "transmit[ted]" in advance of the start of the intervals set up for remotes to transmit information to the hub.

Claim 21 states that first the hub establishes communication cycles, which consist of three intervals: (a) when the hub is allowed to transmit frames to the remotes, (b) when the remotes are allowed transmit frames to the hub, and (c) when each remote is expected to receive a frame from the hub. And then the hub transmits information to the remotes to establish those intervals. If the hub does not define the intervals when the hub will transmit to the remotes and when each remote will transmit to the hub, multiple communicators ( e.g., the hub and a remote or two remotes) could transmit simultaneously and their signals would collide. Thus, the hub-sent information must indicate both the start and end time of the intervals of each communication cycle.

To fulfill the core claimed function of power saving, each remote must know when its receiver and transmitter can be off and must be on, which naturally, perhaps necessarily, calls for the scheduling information to arrive before any remote transmissions begin. The specification confirms that the interval allotment must be defined (and communicated to the remotes) before the remote-transmission opportunities begin. Atlas does not seriously dispute that the specification validates the district court's construction, but instead argues that the medium access control protocol, rather than the hub, defines those intervals. The specification indicates, however, that the hub uses a medium access control protocol as part of its functionality, not that the medium access control protocol performs any independent function. Thus, both the claims and specification must be understood to mean that the "establishing" and "transmitting" limitations require the hub to define and transmit the start time and duration of each communication cycle and its constituent intervals in advance.

The Doctrine of Claim Differentiation is Not Applicable Here

Atlas invokes the doctrine of claim differentiation, pointing to independent claims 1, 12, 14, and 34 as containing more explicit references requiring the hub to define intervals in advance. Although sometimes that doctrine is important in claim construction, it cannot support Atlas's position on claim construction here. The claims invoked do not at all suggest any notion of establishing as mere initiating. Moreover, each of the invoked claims contains language that, under Atlas's arguments, avoids a conclusion of superfluousness under the construction of the "establishing" and "transmitting" limitations at issue here. In any event, we have been cautious in assessing the force of claim differentiation in particular settings, recognizing that patentees often use different language to capture the same invention, discounting it where it is invoked based on independent claims rather than the relation of an independent and dependent claim, and not permitting it to override the strong evidence of meaning supplied by the specification. Here, claim differentiation is not significant enough to alter our conclusion on whether the claimed scheduling information must be sent before remotes begin transmission.

The district court in this case concluded that, as long as the information must be sent before the remotes transmit, as we conclude it must, Medtronic's devices do not infringe. For that reason, we affirm the summary judgment of non-infringement.

Summary Judgment of No Anticipation or Obviousness is Reversed Due to Erroneous Claim Construction

A distinct issue of claim construction is presented by the district court's summary-judgment rejection of Medtronic's invalidity challenges to claim 21. The court held that language in clause [b], "communication cycles, each of which has intervals during which the hub and the remotes transmit and receive frames," requires, as a matter of "plain meaning," that "the hub and the remotes transmit and receive frames during each communication cycle, not that the hub and the remotes simply may do so during a communication cycle as Medtronic argues." We reject that claim construction. We therefore reverse the grant of summary judgment of no anticipation or obviousness, which rested on the district court's incorrect claim construction.

The district court relied entirely on what it viewed as the "plain meaning" of the claim language. But the claim language does not have the decisive plain meaning the district court found, and contextual considerations point compellingly the other way. The district court did not rely on anything for its construction except the claim words understood in isolation. As soon as the analysis widens its focus to examine the context, the answer to the claim construction question here becomes clear: the language sets aside times in which things are allowed to happen, as in the sentences about classrooms and courtrooms noted above. In particular, the claim language requires only that each cycle have one or more intervals in which remotes are allowed to transmit.

The other language of claim 21 strongly supports this reading. It speaks of "intervals" "when the remotes are allowed to transmit frames to the hub." Again: "those intervals when the remote is allowed to transmit frames to the hub." And again: "the intervals in which the remotes are allowed to transmit frames to the hub." Many other claims of the patent are similar.

The specification does not contain any requirement that at least one remote (much less all remotes) transmit a frame during each communication cycle. Instead, the specification explains that the remotes request transmission opportunities, which are "amount[s] of time during which the remote may transmit one or more frames to the hub." We therefore reject the district court's construction of the clause [b] claim language on which it relied to reject Medtronic's invalidity challenge to claim 21 on summary judgment. We reverse the grant of summary judgment of no anticipation or obviousness and remand for further proceedings in light of the proper construction, requiring only (as relevant here) that there be intervals in which remotes are permitted to transmit frames.

Atlas IP, LLC v. St. Jude Medical, Inc. , Fed. Cir. Case 2015-1190, (October 29, 2015)

This case is closely related to Atlas IP, LLC v. Medtronic, Inc., decided today. The two cases involve the same patent and some of the same claim language. The district court adopted constructions of the "establishing" and "transmitting" limitations, which are also found in claim 21, the subject of Atlas v. Medtronic. Initially, it construed the highlighted language in clause [c] to mean "the hub transmitting to the remotes information necessary to know in advance the starting time and duration of the communication cycle and of each of two or more predeterminable intervals during each communication cycle." Then, on St. Jude's motion for summary judgment, the court went beyond that construction. The court held that its "in advance" requirement meant that the information specifying "when the communication cycle starts and its duration . . . must be transmitted in advance of the very communication cycle at issue." That is, it construed the "transmitting" limitation to require not just that specified information be transmitted to remotes before the remotes begin transmitting in that cycle, as sufficed for noninfringement in the Atlas v. Medtronic case, but that "the hub transmits to the remotes information necessary to know the starting time and duration of the communication cycle in advance of that communication cycle."

Atlas agreed that there was no infringement "under this interpretation of 'in advance.'" The district court therefore granted St. Jude summary judgment of non-infringement and entered a final judgment.

In Atlas v. Medtronic, we today hold that the starting time and duration of the cycle and of remote-transmission intervals within each cycle must be communicated by the hub to the remotes before the time at which remotes may begin transmitting. Here we hold, in agreement with Atlas, that the claim language at issue does not require that the cycle's starting time and duration be communicated to the remotes even earlier, i.e., before the communication cycle begins. The district court's contrary conclusion, adopting St. Jude's argument, rests at bottom on the notion that, unless that information is sent before the start of the cycle, the remotes would not be awake to receive the hub-sent information about the cycle. But the patent does not support that premise or, therefore, the district court's construction.

Nothing in the claim language or the specification requires that the hub transmit information to the remotes about the starting time of the communication cycle before the start of the communication cycle. St. Jude therefore rests its argument ultimately on the repeated assertion, which persuaded the district court, that the claimed invention, in order to function, requires at least the starting-time information (perhaps also the duration information) to be sent to the remotes before the cycle begins. Unless the hub did so, St. Jude argues, the remotes could not know to power on their receivers for the start of the cycle and so would not receive the scheduling information (allotting reception and transmission intervals) sent from the hub in the first part of the cycle. As a legal matter, of course, "a construction that renders the claimed invention inoperable should be viewed with extreme skepticism." But that principle does not decide this case. St. Jude has not shown that the district court's construction must be adopted in order to avoid inoperability.

We conclude that the district court erred in construing the "transmitting" limitation to require that the starting time and duration of a communication cycle be sent in advance of the communication cycle. Because there is no ruling about infringement under any other claim construction, we vacate the summary judgment of noninfringement and remand for further proceedings.

Nat'l Oilwell Varco, L.P. v. Glenn A. Ballard, Jr., Fed. Cir. Case 2015-1041 (October 30, 2015)

Tesco filed a complaint against NOV for infringement patents involving a tool used in well drilling technology. NOV filed a series of motions to compel requesting, in part, information about any relevant documents that evidence what occurred during the period prior to the bar date. Tesco claimed that it had already disclosed all relevant documents, but nevertheless eventually released a series of printed invoices for brochures. In light of these invoices, NOV specifically requested any information about the brochures, including the brochures themselves, but Tesco denied the continuing existence of the brochures. During a status conference, the district court asked Tesco about the brochures, and Ballard, Tesco's attorney, insisted that Tesco had produced all responsive documents.

Due to Non-production, the Court Sanctioned Tesco by Reversing the Burden of proof on Validity but the Jury Concluded that Certain Claims were not Invalid and Were Infringed.

At trial NOV cross-examined one of the inventors of the patents-at-issue, Nikiforuk. NOV questioned Nikiforuk about an image in Exhibit 851, which NOV claimed was the missing brochure from that Tesco contended no longer existed. NOV explained that it found the brochure in a box of documents from a prior litigation between Tesco and one of the defendants, and placed the document in their pretrial exhibit list.

The next day, Ballard informed the court that Tesco had produced a low-resolution, black and white, single-page version of the brochure during discovery, and argued that none of the defendants had asked for a clearer version of the document. A few days later Ballard explained that he had done further research and that Luman had contacted the designers of the brochure. Ballard then stated to the court:

We found the animator Don Karr who actually did the rendering in question. That animator says unequivocally that this is not the invention in the brochure. He left Tesco four years ago. We didn't have his name until this weekend. He lives in Canada. But if the trial -- if they want to continue to maintain that 4008 is the invention, we're going to want to call him at some point in the trial.

Ballard again argued that Tesco sufficiently produced the image in black-and-white form, but the court disagreed, stating that the black-and-white version was not equivalent to the color version, especially with regards to the point of connection for the link arms. Ballard then continued:

I think the issue has been put to bed. It's not the image. [In addition to Karr, we also talked to a guy last night named] Jim Orcherton, who was also an individual who worked on the rendering. He also confirms that it's not the tool. We could call both of them.

Ballard reiterated that, based on the statements of Karr and Orcherton, "there is no doubt that [the image in the brochure is] not Mr. Nikiforuk's invention." Ballard made this same assertion to the jury in his closing argument.

In light of the non-production of the original brochure, the district court sanctioned Tesco by reversing the burden of proof on validity, and setting the burden to be a preponderance of evidence. Nonetheless, the jury concluded that NOV infringed the patents-at-issue, found certain of those claims to be not invalid.

The Court Dismisses with Prejudice due to the Misrepresentations, and the Parties Settle

After trial, NOV filed post-trial summary judgment motions of invalidity under 35 U.S.C. § 102(b) and § 103 based on what it asserts was disclosed in the brochure. The court denied NOV's motion regarding the on-sale bar but granted NOV's post-trial summary judgment motion for obviousness. The court did not base the obviousness determination on the brochure, but instead relied on an obvious-to-try analysis.

NOV continued its post-trial motions practice with a focus on its request for attorney's fees under § 285. Tesco filed a motion seeking judgment in its favor regarding the exceptional case determination, arguing that a "trial" was unnecessary because all relevant allegations regarding litigation misconduct had already been heard by the court. During a hearing, the court asked Ballard if he currently believed that the brochure disclosed the invention, and Ballard admitted that it did, but reiterated that Karr and Orcherton had told Luman during trial that the brochure did not disclose the invention. At the same hearing, the district court expressed its concerns that Tesco may have brought suit without doing the necessary due diligence to find a brochure that could have been invalidating.

Shortly thereafter the district court sua sponte dismissed the case with prejudice under the court's inherent authority based on counsel's inaccurate representations "to the Court during trial." The court found that Karr and Orcherton's testimony was "contrary to the representations Tesco made to the Court during trial." The court concluded that Karr did not "unequivocally" state that the brochure did not include the invention. The court found that the representation to the court during trial justified a finding of bad faith. The court said that had Karr and Orcherton's actual statements been reported to the court, it may have entered judgment for NOV at that point in the trial. Indeed, the Attorneys concede on appeal that they knew that the brochure disclosed the invention within days of telling the court that it did not and knew that Karr did not prepare the rendering, despite telling the court he did.

The court did not award fees to NOV at this time, but said it was reserving the question of whether fees might be appropriate for later consideration in light of its findings. Tesco and the Attorneys again filed notices of appeal. During the pendency of the appeal, Tesco, with new counsel, reached a settlement and a mutual release with all defendants, including a release of the request for attorney's fees under § 285. The Attorneys joined the settlement, including the mutual releases. The Attorneys maintain, however, that the releases they executed explicitly carved out the Attorneys' right to continue to pursue this appeal.

Precedent Suggests There is No Case or Controversy Where There is no Monetary or other Sanction

We determine our jurisdiction over a case or controversy according to Federal Circuit law, not regional circuit law. The Attorneys argue that there remains an Article III case or controversy because the statements made in the district court's opinion constitute a sanction against the Attorneys, and the subsequent reputational harm to the Attorneys is a sufficient injury-in-fact to justify our jurisdiction. NOV responds that, due to the settlement agreement, there is no enduring case or controversy. All parties mutually released each other, including the Attorneys, from any further liability, and NOV claims that statements made in an opinion issuing formal sanctions against Tesco, not the Attorneys, cannot justify our jurisdiction.

This appeal presents two questions that must be resolved in order for us to have jurisdiction over the dispute: (1) can the sanctions order that was explicitly issued against Tesco be considered a formal reprimand against the Attorneys so as to provide them with standing to pursue this appeal; and (2) what is the effect of the settlement by all parties on the redressability of the Attorneys' request for relief? In order for us to have jurisdiction over this appeal, we would have to conclude that the order was the equivalent of a formal reprimand against the Attorneys and that we can redress the injury to their reputation. Because we do not find we can redress the Attorneys' claimed injury, we need not decide whether the sanctions order in this case is the type of reprimand that could confer standing to pursue this appeal.

We have recently addressed the appealability of a sanctions order. In Precision Specialty Metals, Inc. v. United States, 315 F.3d 1346 (Fed. Cir 2003), we held that we had jurisdiction when the Court of International Trade formally reprimanded a DOJ attorney. The Court found that the attorney violated Rule 11 due to misrepresentations made to the court, including the omission of language from quotations. The Court did not impose monetary sanctions but the opinion concluded with the statement: "Accordingly, the court hereby formally reprimands her."

On appeal, we concluded that we have jurisdiction to review the formal reprimand of an attorney for attorney misconduct. We explained that a formal reprimand, even without monetary sanctions, could have a "seriously adverse effect upon a lawyer's reputation and status in the community and upon his career."   Because of this, we concluded that the attorney had standing to appeal the order independently of any appeal by the parties.   We noted, however, that our jurisdiction did have limits—"judicial statements that criticize the lawyer, no matter how harshly, that are not accompanied by a sanction or findings, are not directly appealable." Allowing appeals based solely on concerns about professional reputation would open the floodgates to appeals "by any nonparty who feels aggrieved by some critical statement made by the court."

Precision Specialty Metals and other cases require a formal sanction or reprimand to justify our jurisdiction over an appeal by an attorney from an order criticizing the attorney's conduct. The Attorneys argue that the present order should be considered the equivalent of a formal reprimand because the dismissal was predicated on the conduct of the Attorneys. The Attorneys further say that having their client's case dismissed is more harmful to them than would be a small monetary sanction, which they contend surely would justify the exercise of our jurisdiction under Precision Specialty Metals.

There is no precedent that addresses the effect of a subsequent settlement agreement. If Tesco, NOV, and the Attorneys had not entered into a settlement absolving all parties of any further liability, we would be required to determine if the statements made in the district court order are functionally equivalent to a formal reprimand, and thus provide the Attorneys with the standing necessary to pursue this appeal. The intervening settlement, however, renders that determination unnecessary to the resolution of this appeal.

The Effect of the Intervening Settlement

Our court has not previously determined the effect of an intervening settlement on an appeal of an order containing critical statements about the conduct of an attorney. Our sister circuits have, however, addressed the effect of a change in circumstances which removes or moots the underlying judgment. We agree with their conclusion that an intervening settlement can abrogate the case or controversy justifying appellate jurisdiction. The Attorneys, in essence, face a redressability problem. Once all parties entered into the settlement agreement, no party—except the Attorneys for reputational reasons—had any enduring interest in the underlying order dismissing the case with prejudice. The case was, for all purposes, complete, considering that the settlement resolved the outstanding motion for attorney's fees under 35 U.S.C. § 285. The fact that the sanction was directed at Tesco in the opinion, not the Attorneys, further supports the conclusion that no party retains an interest in the judgment by the district court. Our options for redressing the reputational injury of the Attorneys are therefore greatly limited.

We agree that statements made in a judicial opinion can harm the reputation of attorneys, and that an attorney's reputation is one of his or her most valuable assets. But that concern alone is insufficient to justify our jurisdiction where there is no judgment that remains. There is no remaining sanction which could be vacated or punishment imposed upon the Attorneys which could be reversed. Because we find that, in light of the settlement entered by all parties to the litigation, including the Attorneys, there remains no on-going case or controversy, we dismiss the appeal for lack of jurisdiction.

Judge Newman's dissent

The issue on appeal is whether the two sanctioned attorneys should have the opportunity to "clear their names" by appealing the sanctions order. My colleagues hold that they do not, for the reason that "a full hearing on litigation misconduct" would be "an unnecessary use of the district court's and the parties' resources." These sanctioned attorneys ask for the opportunity to provide privileged records that they say will clear their name, stating that these records were proffered to the district court judge, who declined to receive them. These sanctioned attorneys are surely entitled to an appeal (or remand to the district court, as alternatively requested). From my colleagues' contrary ruling, I respectfully dissent. My colleagues on this panel hold that they do not, for the reason that "a full hearing on litigation misconduct" would be "an unnecessary use of the district court's and the parties' resources."   Maj. Op. at 22.   Thus this court holds that an appeal to bring out potentially mitigating information is not available.

These sanctioned attorneys ask for the opportunity to provide privileged records that they say will clear their name, stating that these records were proffered to the district court judge, who declined to receive them.   These sanctioned attorneys are surely entitled to an appeal (or remand to the district court, as alternatively requested). Precedent in all of the other circuits would so allow, and fundamentals of due process so require.    From my colleagues' contrary ruling, I respectfully dissent.

 

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