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

January 9, 2017

Overview

In Ethicon, the Circuit affirms the invalidation of a patent to drug-eluting stents. The Circuit reverses a district court determination in Sonix that the term “visually negligible” renders the asserted ‎claims ‎indefinite. ‎ Walker not only affirms over $20,000 in sanctions ordered by the district court but adds another $50,000 in attorney fees against a patentee who refused to drop an infringement case after entering into a settlement agreement. In Van Os, the panel reverses a determination of obviousness as to an Apple application directed to a ‎touch screen interface for rearranging icons.‎

Feedback from readers indicates that few find our abbreviated versions of the full opinions to be of interest. Therefore, in the future we will simply append the entire decision instead of including a Read More link to an edited version. Where cases seem worthy of extended discussion, we will continue to use a Read More link instead of one indicating that the Entire Decision is appended.

Thanks to my colleague Ryan Strauss for his help with this week’s report.

Pete

   
   

In re Ethicon – A divided panel affirms an IPR determination of obviousness involving a patent directed to Ethicon’s drug-eluting stents. The ‎patent teaches that stent coatings delivering drugs locally can reduce restenosis that sometimes happens following angioplasty. ‎Ethicon sued Boston Scientific and Abbott Labs, both of whom then filed petitions for IPR. The IPRs were instituted and merged. The Board rejected all of the claims based on prior art to Tuch, Tu and Lo, dismissing Ethicon’s objective evidence of nonobviousness.

Tuch teaches that the polymer ‎must be biocompatible, explaining that coating overlayers made with ‎materials ‎that have little elasticity can sustain significant cracking during stent deformation and that ‎such ‎cracking can result in more rapid elution of drugs. Tu and Lo teach using an 85:15 weight ratio of VDF:HFP. According to the majority, these teachings satisfy all of the limitations of the claims and ‎support the Board’s combination of the three references.‎

‎Ethicon contends first that Tuch never suggests that the elasticity of the polymer itself is an important ‎characteristic, and asserts that it teaches away from using non-bioabsorbable coatings such as VDF:HFP ‎by recommending bioabsorbable polymers. Second, Ethicon asserts that Tu is directed to medical ‎devices other than stents and teaches away from allowing an elastomeric polymer such as VDF:HFP to ‎be in contact with blood. Third, Ethicon argues that Lo is decades-old, nonanalogous art that provides ‎no motivation to combine its teachings with medical devices. Finally, Ethicon asserts that Lo is directed to ‎coatings for harsh, industrial applications, not implantable medical devices.‎

The majority rules that substantial evidence supports the challenged findings. ‎Ethicon ignores the similar properties shared by coatings suitable for the devices ‎disclosed by Tu and ‎Ethicon’s patent, and ignores embodiments in Tu that teach that the blood contacting ‎layer can comprise ‎VDF:HFP. Lo’s age is ‎irrelevant absent a showing of long-felt need or the failure of others.‎ Ethicon also ignores that Lo discloses ‎properties of VDF:HFP ‎that would have been relevant to a skilled artisan considering a coating on a ‎stent.

As to secondary considerations Ethicon relied solely on its expert’s conclusory testimony to support its copying allegations. ‎Regarding unexpected results, Ethicon’s expert never even opined that the results pointed to would have ‎been unexpected to a person of ordinary skill. Substantial evidence supports the Board’s finding that the ‎evidence of commercial success, industry praise, and ‎unexpected results did not establish this was due to the ‎‎85:15 VDF:HFP coating, rather than to an unclaimed feature such as the drug or stent design.

Judge Newman dissents, arguing that the references recite thousands of polymer and copolymer components for ‎stent coating materials, but not the copolymer of Ethicon’s patent, although this copolymer was known for ‎other uses. According to Judge Newman, there is no suggestion of its use as a drug-eluting coating in a vascular stent, nor ‎were its advantages foreseen.

   
   

Sonix v. Publications Intl. – The Circuit reverses a district court determination that the term “visually negligible” renders the asserted claims ‎indefinite under 35 U.S.C. § 112 ¶ 2. ‎Sonix’s ’845 patent describes a system for using a graphical indicator (e.g., ‎a matrix of small dots) to encode information on the surface of an object. The surface may feature additional information as well; for example, illustrations or icons in a ‎children’s book.

Encoding information, such as bar codes, on the surface of an object is not new. The ‎‎’845 patent purports to improve on conventional methods by rendering the graphical indicator “visually ‎negligible.” By way of example, the graphical indicator stores the same information as the ‎bar code, but in a manner that does not “interfere with the other main information ‎on the surface.” ‎In one embodiment the micro-units are dots, arranged in a ‎matrix. The written description discloses differentiability, brightness, and homogeneity requirements for the ‎graphical indicators being negligible to human eyes. For best results, the graphical micro-unit must be so tiny that only a microscope ‎apparatus can detect it.

Sonix alleged that children’s books using dot pattern technology produced by GeneralPlus infringed. In response, GeneralPlus and its parent company requested two separate ex parte reexaminations, but the PTO found that the claimed invention was patentable over the cited art. Appellees did not contend that the claims were indefinite until fairly late in the litigation, but the district court granted their motion for summary judgment of invalidity based on indefiniteness.

On appeal, the panel agrees with Sonix that under the Nautilus test, a skilled artisan would understand, with reasonable certainty, what it ‎means for an indicator in the claimed invention to be “visually negligible.” According to the opinion, the intrinsic evidence supports, ‎and the extrinsic evidence is consistent with, this conclusion.‎ Moreover, until the filing of the summary judgment motion, no one, including the ‎experts, ‎had any difficulty determining the scope of “visually negligible.” ‎

The Circuit has rejected the proposition that claims involving terms of degree are ‎inherently indefinite. For example, in Enzo the clause “not interfering substantially” was found acceptable, ‎the Circuit reasoning that the intrinsic evidence provided guidance as to the scope of the claims, ‎including examples of noninterfering structures and criteria for their selection. Terms of degree have been found indefinite, however, when such guidance is lacking. Datamize involved ‎claims to an “aesthetically pleasing” look and feel for interface screens. Such ‎language rendered the claim indefinite because, although the written description did detail various ‎elements that might affect whether a screen was aesthetically pleasing, ‎it provided no guidance to a person making aesthetic choices such that their choices will result in an ‎‎”aesthetically pleasing” look and feel of an interface screen. ‎

Similarly, in Interval Licensing, the Circuit found indefinite a claim that recited the display of content “in an ‎unobtrusive manner that does not distract a user.” The phrase was found to be a term of degree, ‎‎purely subjective, and the claim language offered no objective indication of the manner in which ‎content images are to be displayed to the user. ‎

The panel agrees with the district court that the claim language itself does not unmistakably make clear the ‎scope of “visually negligible”; however, it disagrees that the language is “purely subjective,” as was the language in Datamize and Interval Licensing.

The opinion then turns to the “written description” requirement to determine whether there is some standard for measuring visual negligibility. The ’845 patent contains considerably more detail than Datamize or Interval Licensing, including: (1) an exemplary ‎design for a visually-negligible indicator; (2) requirements for the graphical indicators being negligible to ‎humans; and (3) two specific examples of visually-negligible indicators. The panel concludes that the level of detail ‎provided in the written description is closer to that provided in Enzo than it is to Datamize or Interval Licensing.

   
   

Walker v. Health Int’l. – The Circuit affirms over $20,000 in sanctions awarded by the district court because the patentee continued to litigate after the parties settled all claims. ‎The panel adds over $50,000 in additional attorney fees and double costs as a result of Walker’s frivolous appeal, groundless attacks on the conduct of opposing counsel, and repeated distortion of controlling case law.

Walker filed suit for patent infringement against Health International (“HSN”). Walker and HSN, both represented by counsel, ‎engaged in mediation and, that same day, entered into a hand-‎written Mediated Settlement Agreement. The Agreement required that HSN pay $200,000 to Walker within ‎thirty days. Following payment of the $200,000, Walker became ‎obligated to deliver a release to HSN and by joint stipulation the ‎parties were to dismiss all claims with ‎prejudice.

HSN filed a motion to stay all deadlines but Walker opposed the motion, ‎stating that HSN’s allegation that the Agreement resolved all claims was incorrect, contending that there were significant issues yet to be resolved. ‎Walker filed motions to amend the complaint and set a Markman hearing. HSN filed a motion to enforce the Agreement, appending correspondence from Walker’s counsel ‎acknowledging that the case was settled, and a motion for sanctions. The district court granted HSN’s motions and awarded HSN ‎attorneys’ fees and costs amounting to over $20,000 resulting from Walker’s vexatious actions after settlement.

Walker first argues on appeal that the district court erred in awarding fees ‎without findings of subjective bad faith, but the panel rules that Walker mischaracterizes clear authority. ‎Federal courts may award damages under their equitable powers ‎when litigants have acted in bad faith, vexatiously, wantonly, or for ‎oppressive reasons. The district court’s detailed findings provide ample support for its conclusion of vexatiousness.  

Walker argues that HSN’s ‎counsel violated Colorado Rule of Professional Conduct 1.3 by failing ‎to immediately notify him that HSN had tendered the settlement ‎payment to its counsel.  The panel holds that Walker’s argument is contrary to the rule’s ‎explicit language and leads to illogical conclusions. As such, the ‎positions taken by Walker on appeal in the briefs and at oral ‎argument were frivolous.‎

The record lacks any support for ‎Walker’s attempts to frustrate the comprehensive settlement by ‎prolonging litigation.  Walker’s ‎numerous mischaracterizations of clear authority in arguing the ‎appeal also makes this case frivolous as argued.  Particularly ‎troubling are Walker’s baseless assertions of misconduct against his opposing counsel and continued ‎misrepresentation of clear, binding Supreme Court precedent even ‎after the distortion was pointed out by opposing counsel.  The ‎continued misrepresentation standing alone is a very serious matter ‎that could warrant sanctions.  ‎

The panel rules: “In keeping with this court’s longstanding policy of enforcing Rule 38 ‎vigorously, we exercise our discretion to impose sanctions in the full ‎amount of HSN’s request.” The panel also considers the attorney who wrote and signed the briefs to be equally responsible and therefore holds counsel jointly and severally liable for the assessed damages.‎

   
   

In re Van Os – The Circuit vacates and remands a Board decision that affirmed an examiner’s rejection of Apple’s ’470 application based upon obviousness because the Board failed to explain its reasoning, other than to say the invention was “intuitive.” The application is directed to a user interface including a “first user touch” to open an application, a longer “second user touch” to initiate the interface reconfiguration mode, and a “subsequent user movement” to move an icon. The Board affirmed the rejection of some claims of the ’470 application as being obvious in view of Hawkins and Gillespie. Hawkins discloses a personal communication device with a touch-sensitive screen in which a user can rearrange buttons by dragging a button from one location to another location. Gillespie discloses a computer interface that allows icons to be removed or rearranged when placed in an activated state. Gillespie also teaches that an individual icon could be “activated” by touching the icon with multiple fingers, with rapid double taps, hovering the finger over an icon without touching the touch screen, or holding the finger on an icon for a sustained duration.

The examiner determined that Hawkins discloses each limitation of the rejected claims except an interface reconfiguration mode that is initiated by a user touch having a longer duration than a user touch of a first duration used to initiate an application. The examiner relied on Gillespie’s disclosure of a sustained touch and reasoned that adding this feature to Hawkins “would be an intuitive way for users of Hawkins’ device to enter into the editing mode.” The Board sustained the examiner’s rejection, holding that the combination of Gillespie with Hawkins would have been “intuitive.”

The panel holds that the Board erred in affirming the examiner’s rejection because neither the Board nor the examiner provided any reasoning or analysis to support the finding of a motivation to add Gillespie’s disclosure to Hawkins beyond stating it would have been intuitive. The Circuit vacates and remands for further proceedings because the Board’s decision was “potentially lawful but insufficiently or inappropriately explained.” Judge Newman writes separately in concurrence, agreeing with the majority’s holding that the Board’s rationale was insufficient to warrant an obviousness rejection. However, she dissents as to the remedy, arguing that the appropriate remedy should have been to instruct the Board to allow the application because the Board failed to meet its statutory burden.

Comment: This is the third Circuit decision in the recent past in which the Circuit has instructed the Board that it requires a full explanation of the reasons for a determination of obviousness. See In re NuVasive, Inc., Case No. 2015-1670 (Dec. 7, 2016) and In re Warsaw Orthopedic, Inc., 832 F.3d 1327 (Fed. Cir. 2016). Hopefully the Board will get it this time and these expensive and time consuming remands will no longer be necessary.

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