Fresh From the Bench: Recent Patent Cases From the Federal Circuit and the Oregon District Court
Rambus - The Circuit reverses a determination of anticipation by the Patent Trial and Appeal Board in an inter partes reexamination where there is no substantial evidence to support the Board's decision.
Consumer Watchdog - The Circuit rules that a consumer advocacy group does not have standing to appeal the loss of a patent reexamination even though under the patent statute it was able to file a reexamination request.
Krauser – The Circuit transfers back to the Eleventh Circuit the appeal of a declaratory judgment action seeking to establish patent ownership rights, holding that it has no jurisdiction to hear the appeal.
Videx - In a ruling dealing with patent pleading requirements under Iqbal and Twombly, the Oregon District grants defendants' motion to dismiss where the plaintiff failed to set forth sufficient details regarding infringement following inter partes reexamination of the patent in suit.
In Re Rambus, Fed. Cir. Case 2013-1192 (June 4, 2014)
A unanimous panel of the Circuit reverses a determination of invalidity of the Patent Trial and Appeal Board because there is no substantial evidence to support its decision. The present case involved an appeal from an inter partes reexamination in which the Board had determined that the claims were anticipated by a patent to Bennett. Micron file the reexamination request but the case between Micron and Rambus settled. Micron therefore did not appear in the appeal, and the PTO elected not to intervene. Nonetheless, the panel determined that a live controversy existed regarding the patentability of the Rambus patent claims.
The patent claims at issue are directed to a system for improving the efficiency of computer memory. Some memory systems include a wait signal that is sent from a memory device to a memory controller that says the memory device is not ready to receive or send data. The Board relied on Bennett's schematic representations of operations occurring on a memory bus. According to the Board, Bennett's "Parameter VI" was representative of an amount of time that would transpire before a particular operation took place, and therefore anticipated the claimed "value that is representative of an amount of time to transpire after which the memory device outputs the first amount of data."
The panel disagreed, saying: "A value cannot represent an amount of time if there are additional factors, wholly unrepresented by that value, that necessarily impact or represent, the amount of time." In practice, an operation called arbitration takes an unknown amount of time because a device may lose arbitration a number of times in a row. As Rambus argues, the wait signal may also delay the data transfer for an indeterminate amount of time if it indicates that the memory device is busy. Thus, when the invention disclosed in Bennett actually functions, it does not include a known delay time; rather, it has an indefinite delay time based upon arbitration, busy memory devices, and other functions. Thus, Parameter VI is only "representative" of one source of delay because the actual delay can be longer due to other sources of delay. As such, Parameter VI is not a "value that is representative of an amount of time to transpire after which the memory device outputs the first amount of data." Accordingly, the panel reversed the Board's decision that Bennett anticipates the claims at issue.
This case, like Tobinick v. Olmarker and Rydevik decided two weeks earlier, shows that the Circuit is not reluctant to reverse determinations by the Patent Trial and Appeal Board, even when the standard of review is so low that it is simply looking for "substantial evidence" to support the Board's decision.
Consumer Watchdog v. Wisconsin Alumni Research Foundation, Fed. Cir. Case 2013-1377 (June 4, 2014)
The panel finds that a consumer advocacy group does not have standing to appeal the loss of a patent reexamination proceeding even though it may have had standing to file a reexamination request.
Consumer Watchdog describes itself as a not-for-profit public charity dedicated to providing a voice for taxpayers and consumers in special interest-dominated public discourse, government and politics. It filed a reexamination request against a patent owned by the Wisconsin Alumni Research Foundation (WARF) that is directed to human embryonic stem cell cultures, contending that the patent would preempt all uses of human embryonic stem cells, particularly those for scientific and medical research. Significant in this appeal is that Consumer Watchdog has not alleged any involvement in research or commercial activities involving human embryonic stem cells. Nor has it alleged that it is an actual or prospective competitor of WARF or licensee of the patent. Instead, Consumer Watchdog simply alleges that WARF's "broad and aggressive assertion of the patent has put a severe burden on taxpayer- funded research in the State of California where Consumer Watchdog is located."
According to Judge Rader, writing for a unanimous panel, federal courts do not have authority to entertain every dispute. Article III only allows the federal courts to adjudicate "cases" and "controversies." Over the years federal courts have developed a variety of doctrines to clarify how Article III limits the federal courts' jurisdiction. These doctrines—including standing, ripeness, and mootness—distinguish justiciable disputes from those that are not.
The present appeal concerns Article III standing. To meet the constitutional minimum for standing, the party seeking to invoke federal jurisdiction must satisfy three requirements. First, the party must show that it has suffered an "injury in fact" that is both concrete and particularized, and actual or imminent (as opposed to conjectural or hypothetical). Second, it must show that the injury is fairly traceable to the challenged action. Third, the party must show that it is likely, rather than merely speculative, that a favorable judicial decision will redress the injury. Although Article III standing is not necessarily a requirement to appear before an administrative agency such as the PTO, once a party seeks review in a federal court, "the constitutional requirement that it have standing kicks in."
Consumer Watchdog does not identify any alleged injury aside from the Board denying Consumer Watchdog the particular outcome it desired in the reexamination, i.e., canceling the claims of the '913 patent. Consumer Watchdog does not allege that it is engaged, or plans to become engaged, in any activity involving human embryonic stem cells that could form the basis for an infringement claim. Nor does it allege that it is an actual or prospective licensee, or that it has any other connection to the patent or the claimed subject matter. Instead, Consumer Watchdog relies on the Board's denial of Consumer Watchdog's requested administrative action—namely, the Board's refusal to cancel claims patent. That denial, however, is insufficient to confer standing. Nor is it enough that the inter partes reexamination statute allows a third party requester to appeal decisions favorable to patentability. A statutory grant of a procedural right, e.g., right to appeal, does not eliminate the requirements of Article III. Moreover, the "conjectural or hypothetical" nature of any injury flowing from the estoppel provisions of the reexamination statute is insufficient to confer standing upon Consumer Watchdog. The court, however, leaves it to future panels to decide whether, under other circumstances, the preclusive effect of the estoppel provisions could constitute an injury in fact.
Krauser v. Biohorizons , Inc. and BioLok, Fed. Cir. Case. 2013-1461 (June 4, 2014)
This declaratory judgment action seeking to establish ownership rights in a dental implant system was originally appealed to the Eleventh Circuit, which transferred the case to the Federal Circuit, noting that the Federal Circuit has exclusive appellate jurisdiction in actions arising under patents. Here the Federal Circuit panel holds that the Federal Circuit does not have jurisdiction, and therefore transfers the appeal back to the Eleventh Circuit.
Krauser designed a dental implant system and employed Minimatic, the predecessor of BioHorizons (BHI), to produce prototypes based on Krauser's drawings. The parties entered into an agreement, which was revised several times over the years, relating to ownership of the technology and royalties under pertinent patents. As a result of royalties not being paid and related bankruptcies, the parties ended up in litigation.
Krauser first sued BHI in Florida state court, seeking a declaration that he was the inventor and owner of the subject matter set forth in the patents. BHI removed the case to federal court based on diversity jurisdiction under 28 USC § 1332 and patent jurisdiction under 28 USC § 1338(a). Following a BHI motion to dismiss, Krauser withdrew, without prejudice, his claims of inventorship and amended his complaint to recited an ownership claim. Krauser later filed a separate action in the Southern District of Florida, seeking correction of inventorship of BioLok patents that were exclusively licensed to BHI. The Southern District granted BHI's motion for summary judgment and dismissed this case. Krauser appealed that dismissal to the Eleventh Circuit, and BHI's motion to transfer the appeal to the Federal Circuit was granted, the Eleventh Circuit merely stating that the case belonged in the Federal Circuit since it "arose under" the patent laws.
To support jurisdiction in the Federal Circuit, BHI argues that its theories, even if ultimately incorrect, are nonetheless "plausible" and require the Federal Circuit to follow the law of the case of the sister circuit in ruling that Federal Circuit jurisdiction is proper. The panel agreed that the Eleventh Circuit's decision should normally be the law of the case, but concluded that there is no plausible basis for this court's jurisdiction.
BHI first argues that the Circuit has jurisdiction because Krauser included an inventorship claim in his original complaint. The panel agrees that this claim "arose under" federal patent law but because Krauser dismissed that claim, there is no jurisdiction based on this once-asserted claim.
Second, although Krauser had removed his inventorship claims from this case, BHI contends that the well-pleaded complaint rule requires the Circuit to consider the issue of inventorship, even when adjudicating Krauser's claims of ownership. The panel disagreed that Krauser's ownership theories rested on a theory of inventorship, and in the present appeal Krauser represented that he had withdrawn his patent ownership claim. Therefore, BHI's second jurisdictional theory fails.
BHI further argues that even if Krauser's claims are based in state law, there is federal preemption because Krauser's ownership claims are based on his contribution of the ideas in the dental implant system. But even if Krauser's ownership claims are preempted, the panel ruled that this does not establish jurisdiction. The Supreme Court addressed this issue in Metropolitan Life Insurance v. Taylor, 481 U.S. 58, 63 (1987), finding that because "federal preemption is ordinarily a federal defense to the plaintiff's suit . . . it does not appear on the face of a well-pleaded complaint, and, therefore, does not authorize removal to federal court." Therefore, BHI's third theory does not support Federal Circuit jurisdiction over this case.
Because there is no plausible claim that the Federal Circuit has jurisdiction, the panel determined that the case should be transferred back to the Eleventh Circuit.
The law of the case doctrine is normally applied in cases like this that are transferred between circuits to prevent cases from being bounced back and forth. The Federal Circuit was perhaps more willing to find that the "no plausible claim" standard had been met here because the Eleventh Circuit provided no analysis in its transfer of the case other than to say the case "arose under the patent laws." It is a common misperception that if the word "patent" is mentioned in pleadings, Federal Circuit jurisdiction is invoked. This case makes clear that the Circuit will examine the bases for jurisdiction even though lack of jurisdiction is not pressed by the parties, who simply want their case to be heard.
Videx, Inc. v. Triteq Lock and Security, LLC, D. Or. (June 4, 2014), 2014 US Dist LEXIS 63653
Chief Judge Aiken of the Oregon District grants defendants' motion to dismiss where the plaintiff failed to set forth sufficient details regarding infringement in its amended complaint filed after inter partes reexamination of the patent in suit.
The patent in suit is directed to an electronic access control device for installation in doors, safes and vending machines. Videx first filed suit against Triteq alleging direct infringement of the patent, and subsequently amended its complaint to add claims of direct infringement against Triteq's customers. Plaintiff later added claims of indirect infringement against Triteq based on its sales of allegedly infringing products to customers.
Triteq successfully sought reexamination of the patent, and the case was stayed. The reexamination resulted in the cancellation of two original independent claims, amendment of seven claims, and issuance of ninety-two new claims. As a result, defendants maintain that the allegedly infringed claims of the original patent in suit no longer exist in substantially identical form, and there can be no infringement related to product sales occurring before the reexamination certificate was issued. The court granted Triteq's request that plaintiff be required to amend its complaint to provide fair notice to defendants of what its new infringement claims are. Plaintiff did so and defendants moved to dismiss.
Applying Ninth Circuit law, the court noted that a complaint is construed in favor of the plaintiff, and its factual allegations are taken as true, but the court need not accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Once a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 563 (2007)
The recently-amended complaint states in pertinent part:
Triteq has been and currently is directly infringing one or more claims of the '600 Patent, including but not limited to claims that were not subject to the reexamination and claims identified on the reexamination certificate, by making, using, offering to sell, and selling within the United States products that embody the inventions disclosed and claimed in the '600 Patent, or by importing into the United States products that embody the inventions disclosed and claimed in the '600 Patent. The Triteq products that infringe the '600 Patent include, but are not limited to, the Triteq Products that embody the patented invention by comprising an electronic access control device in a manner that infringes the '600 Patent.
The amended complaint includes similar allegations of direct infringement against customers and indirect infringement as to Triteq, without providing any additional detail.
Defendants argue that plaintiff's Third Amended Complaint is "vague and ambiguous" and does not sufficiently allege facts supporting a cause of action for direct or indirect infringement, citing Iqbal and Twombly. In response, plaintiff relies on the liberal pleading standard afforded litigants in federal court.
Citing Iqbal, the court determined that plaintiff fails to allege sufficient "factual content that allows the court to draw the reasonable inference" that defendants are liable for infringement of the patent. Relying on K-Tech Telecommc'ns, Inc. v. Time Warner Cable, Inc., 714 F.3d 1277, 1283-84 (Fed. Cir. 2013) and In re Bill of Lading, 681 F.3d 1323, 1335 (Fed. Cir. 2012), the court noted that it is not persuaded by plaintiff's argument that its amended complaint must meet only the bare minimum pleading requirements of Federal Rule of Civil Procedure 8 and Form 18. According to the court, this case has been pending for well over two years, yet plaintiff's current allegations are no more specific than those asserted in its previous complaints. Plaintiff simply and vaguely references Triteq's products, without making clear whether it alleges embodiment of claims that were amended, newly issued, or altogether different from those subject to reexamination. Plaintiff's failure to identify specific claims or claim elements is particularly glaring in light of the patent's reexamination and defendants' repeated assertion that no asserted claim survived the reexamination.
Likewise, plaintiff's amended complaint does not specify the manner in which Triteq products embody or practice specific claims of the patent, other than "by comprising an electronic access control device in a manner that infringes the '600 Patent." Plaintiff maintains that such specificity is not necessary, relying on Bill of Lading. However, the court found this case distinguishable. Unlike Bill of Lading, the patent in suit here has undergone reexamination, placing the basis of plaintiff's patent claims in question and requiring more than the minimal pleading requirements. Further, the complaint at issue in Bill of Lading described the manner of the alleged infringement and "referenced specific claim elements" allegedly practiced. Here, plaintiff does not describe the manner in which Triteq products practice specific claim elements of the patent. In light of the reexamination and nature of this case, plaintiff's failure to allege facts describing the manner of infringement is fatal.
Because the court found the amended complaint to proffer only vague, conclusory and formulaic allegations regarding Triteq's products the case was dismissed. The court refused to permit plaintiff to file further amendments since on two prior occasions plaintiff amended its complaint and did not assert claims of the patent that were not subject to the reexamination. Any attempt to do so now would be untimely and prejudicial to defendants.