Fresh From the Bench: Precedential Patent Cases From the Federal Circuit
By Peter E. Heuser
DeLorme - The panel affirms a decision by the ITC assessing a penalty of over $6 million based on DeLorme's violation of a Consent Order. The panel rejects DeLorme's argument that it did not have to comply with the Consent Order because of the subsequent invalidation of the admittedly infringed claims. In so holding, the panel determines that the Circuit's recent ePlus v. Lawson Software decision is distinguishable. ePlus held that a civil contempt sanction can be set aside when the underlying injunction, upon which the sanction is based, is non-final or reviewable. The panel finds ePlus distinguishable because there is no question in the present case that the Consent Order was final and not appealable.
The panel also disagrees with DeLorme that the sale of individual components, along with instructions as to how to assemble the components to infringe the patent, was not a violation of the Consent Order. Citing the recent Commil v. Cisco Supreme Court decision, the panel notes that DeLorme's allegations of a good-faith belief in the patent's invalidity is not a defense to induced infringement. While not discussing the issue, the panel apparently feels Commil is equally applicable to a good-faith belief in noninfringement.
Judge Tarranto dissents from the penalty order and would remand to the ITC because the ITC has not had an opportunity to consider the effect the invalidation should have on enforcement of the civil penalty for pre-invalidation violations of the Consent Order.
Akamai Technologies, Inc. v. Limelight Networks, Inc., Fed. Cir. Cases 2009-1372, -1380, -1416, -1417 (November 16, 2015)
Construction of "tagging" and "an optimal server"
The claim construction discussion by the panel is a fairly common one so will not be the focus of this summary. In an earlier case between the parties, the court construed "tagging" as "providing a 'pointer' or 'hook' so that the object resolves to a domain other than the content provider domain." The phrase "to resolve to a domain other than the content provider domain" was construed to mean "to specify a particular group of computers that does not include the content provider from which an optimal server is to be selected." The parties accepted these constructions by stipulation in the instant case. This construction was not disputed during the Markman hearing, and was first challenged by Limelight in attempting to re-craft the construction for the jury instructions.
The panel reviewed the evidence and contentions as to construction of "tagging" and concluded that the construction by the district court was correct. Moreover, the panel notes that Limelight stipulated to the construction of "tagging" at the Markman stage and the district court read to the jury the construction of "tagging" to which Limelight stipulated. Limelight cannot argue at the jury instruction stage — after the bulk of the trial was framed and directed by the Markman construction to which it agreed — that the construction was somehow too broad. Limelight is bound to its earlier stipulation.
With respect to "an optimal server," the issue is whether this is necessarily limited to a single "best" server, or can refer to several potentially optimal servers from which content is retrieved. The panel concludes that the intrinsic evidence supports the district court's construction that "optimal" allows for serving from other than a single composite best server. Moreover, neither the plain meaning of "optimal" nor the plain meaning of "best" is as limited as Limelight suggests to an "aggregate best" or "aggregate optimal."
The District Court was Correct in Permitting Akamai's Expert Witness Testimony
To collect lost profits, a patentee must show "a reasonable probability that 'but for' the infringing activity, the patentee would have made the infringer's sales." This is done by determining what profits the patentee would have made absent the infringing product. This analysis must be supported by sound economic proof of the nature of the market and likely outcomes with infringement factored out of the economic picture. Limelight argues the district court committed legal error in allowing lost profits as a measure of damages because Akamai failed to show a causal connection between Limelight's infringement and Akamai's lost profits. Limelight argues that Dr. Ugone's calculation of the share of Limelight's customers that would have gone to Akamai absent Limelight's infringement was arbitrary and not based in sound economic theory. The underlying basis for this argument is the price disparity between Limelight's and Akamai's products, which Limelight says Dr. Ugone either failed to incorporate into his analysis, or incorporated arbitrarily. Limelight's arguments are inapposite.
Limelight originally sold a different, non-infringing service than the one at issue in this case. Limelight's infringing service was released in April of 2005. Dr. Ugone testified that in 2005 Akamai had a market share of 79.8% and Limelight had a market share of 5% and in 2006 Akamai had a market share of 74.7% and Limelight had a market share of 10.7%. Dr. Ugone then calculated an adjusted market share for the years when Limelight's infringing service was on the market and concluded that, assuming Limelight only sold its earlier software, Akamai's market share would have been 81% in 2005 and 79.9% in 2006. Because he did not have sufficient data to determine the market share for 2007, he assumed it would be the same as the market share for 2006. For the sake of "conservatism," Dr. Ugone reduced Akamai's share by 3% and excluded the lowest earning 25% of Limelight's customers who he categorized as particularly price sensitive consumers, who may be unlikely to purchase a higher-priced alternative without Limelight's infringing products in the market. Subject to these assumptions and modifications, Dr. Ugone opined that Limelight's infringing sales totaled approximately $87.5 million.
The lost profit analysis was complicated by the fact that Limelight sold its product for half the price of Akamai's. This affected Dr. Ugone's calculations in two ways. First, he assumed that in the but-for world where Limelight did not sell an infringing product, Akamai would sell its product to some of those customers for twice as much as Limelight had. Second, because of the difference in price between Akamai's product and Limelight's product, Dr. Ugone assumed that the demand for Akamai's product would be 25% less than the demand for Limelight's infringing products. Dr. Ugone explained that, in economics, how a change in price affects a change in demand is described as "elasticity." The more elastic the demand, the more sensitive it is to change. A demand is described as "inelastic" if, when the price changes by a certain percentage, the demand changes by a smaller percentage. As Dr. Ugone explained, "if you change prices by 10 percent and quantity demanded changes by only 5 percent . . . that's an example of something we call inelastic."
Dr. Ugone opined that the demand for Akamai's products was relatively inelastic (i.e. relatively price insensitive) and provided two justifications for calculating that 75% of Limelight's sales would potentially have been made by Akamai. First, because Akamai's costs were "revenue-generating costs," customers would be more willing to expend money to buy Akamai's product. Second, though there would be some "price sensitivity" such that some of Limelight's customers would not purchase the higher-priced Akamai product, the demand was relatively inelastic — meaning the quantity demanded would not change as much as the price changed. The relative inelasticity of demand was supported by Akamai's evidence that Akamai and Limelight were direct competitors, including statements by Limelight that 1) Akamai was its largest competitor; 2) "Limelight and Akamai are, from a scale and quality standpoint, head and shoulders above the rest of . . . Limelight's competition"; 3) demand was driven by end-users not customers; and 4) Akamai maintained a dominant market share despite Limelight's infringing service and lower price. Dr. Ugone conceded that in picking 75% he "had to make a judgment call based on the attributes and come to a conclusion what the adjustments would be." Based on his assumptions, Dr. Ugone determined that Akamai's lost profits were about $74 million.
The considerations outlined above sufficiently support the district court's decision to allow Dr. Ugone's adjusted lost-profits analysis. This court has repeatedly approved similar adjusted market share analyses for estimating lost profits. There is no basis for Limelight's claim that such an analysis here is legally unavailable.
Limelight's argument appears to be that the price disparity between Akamai's and Limelight's prices necessarily created a market segmentation in which Akamai was separate from Limelight. Limelight's argument rests on BIC Leisure Prods., Inc. v. Windsurfing International, Inc., 1 F.3d 1214 (Fed. Cir. 1993), where this court determined that lost profits were unavailable because the accused infringer and the patentee serviced different markets based on a 60-80% price disparity. But that case is easily distinguished on its facts. First, Windsurfing's boards differed fundamentally from BIC's boards; second, at least fourteen competitors vied for sales in the sailboard market; third, demand for sailboards is relatively elastic; fourth, Windsurfing had licensed its patent to two competitors, both selling Boards similar to the patentee's Boards at significantly lower prices; finally, Windsurfing's sales continued to decline after the district court enjoined BIC's infringement, but that the market share indeed went to one of the patentee's licensees. No such evidence exists here.
In conclusion, Dr. Ugone's 25% adjustment for market elasticity was sufficiently grounded in economic principles for the district court to allow it. Though Limelight is correct that its customers expressed a clear preference for lower-priced products — as evidenced by their buying Limelight's significantly cheaper product — and therefore would have been less likely to buy Akamai's products than the average consumer, Dr. Ugone's testimony took this consideration into account both in excluding the lowest 25% of Limelight's customers from his lost profits analysis, and for discounting the potential award for price elasticity. Whether this discount was sufficient is not a legal challenge to the availability of lost profits, but as to the amount of lost profits, which Limelight failed to address in its panel briefing.
DeLorme Publishing Co., Inc. v. Int'l Trade Cmm'n., Fed. Cir. Case 2014-1572
(November 12, 2015)
The Commission instituted an investigation to determine if DeLorme was violating section 337 of the Tariff Act by importing, selling for importation, or selling after importation "certain two-way global satellite communication devices, system and components thereof" that allegedly infringed claims of BriarTek IP's ‘380 patent. The '380 patent is directed to emergency monitoring and reporting systems comprising a user unit and a monitoring system that communicate through a satellite network. The accused products included DeLorme's InReach 1.0 and 1.5 satellite-communication devices, as well as the software and service plan used with the devices.
The Commission later terminated the investigation based on entry of a Consent Order, which provided:
Upon entry of the proposed Consent Order, DeLorme shall not import into the United States, sell for importation into the United States, or sell or offer for sale within the United States after importation any two-way global satellite communication devices, system, and components thereof, that infringe claims 1, 2, 5, 10-12, and 34 of the '380 Patent after April 1, 2013, until the expiration, invalidation, and/or unenforceability of the '380 Patent.
Several months later the Commission instituted an enforcement proceeding based on BriarTek's allegations that DeLorme violated the Consent Order by selling InReach 1.5 and SE devices containing imported components. Four days later, DeLorme filed an action against BriarTek in district court, seeking declaratory judgment of noninfringement and invalidity of the '380 patent. While the district court action was pending, the Commission issued a decision in the enforcement proceeding (1) finding that DeLorme violated the Consent Order, and (2) imposing a civil penalty of $6,242,500. DeLorme appeals.
The Commission Did Not Err in Ruling that DeLorme Violated the Consent Order
The Commission determined that DeLorme violated the Consent Order, finding that DeLorme (1) assembled the accused InReach 1.5 devices by converting previously imported devices and (2) assembled the accused InReach SE devices using, inter alia, imported plastic housing components. It determined that "under the terms of the Consent Order, DeLorme violates the order if, after entry of the order, it imports, sells for importation, or sells or offers for sale within the United States after importation any infringing two-way global satellite communication devices, system, or components thereof." It concluded that DeLorme induced infringement and violated the Consent Order by selling the newly accused devices with instructions to use them in a manner that infringed claims 1 and 2 of the '380 patent. While it concluded that DeLorme also induced infringement by activating previously sold InReach devices, such infringement did not equate to a violation of the Consent Order.
DeLorme argues that even if the devices infringed the claims, the Consent Order did not preclude DeLorme from selling domestically manufactured devices containing imported, noninfringing components. It argues that the terms of the Consent Order instead prohibited DeLorme from using imported components only if the components themselves infringed. It argues that the Commission "rewrote" the Consent Order to "prohibit not just the use of imported, infringing, components, but also the use of any imported components." It argues that the Commission's interpretation of the Consent Order exceeded its authority to block importation of only "articles that . . infringe." 19 U. S. C. § 1337(a) (1) (B) (i).
We agree with the ITC that DeLorme violated the Consent Order by selling InReach 1.5 and SE devices containing imported components with instructions for its customers to use the devices in an infringing manner. The Consent Order provided that DeLorme could not import, sell for importation, or sell or offer for sale after importation "any two-way global satellite communication devices, system, and components thereof, that infringe claims 1, 2, 5, 10-12, and 34 of the '380 Patent." Under these terms, DeLorme was precluded from selling infringing devices containing imported components with instructions to infringe.
Substantial evidence supports the Commission's finding of infringement. Under the Supreme Court's recent decision in Commil USA, LLC v. Cisco Systems, 135 S. Ct. 1920 (2015), a good-faith belief in the patent's invalidity was not a defense to induced infringement. Thus, the Commission did not err in its conclusion that DeLorme violated the Consent Order.
The Commission Did Not Abuse its Discretion in Assessing the Penalty
The Commission imposed a civil penalty under 19 U. S. C. § 1337(0(2) of $27,500 per day for 227 violation days, for a total of $6,242,500. Section 1337(0(2) provides:
Any person who violates an order issued by the Commission under paragraph (1) after it has become final shall forfeit and pay to the U.S. a civil penalty for each day on which an importation of articles, or their sale, occurs in violation of the order of not more than the greater of $100,000 or twice the domestic value of the articles entered or sold on such day in violation of the order. Such penalty shall accrue to the United States and may be recovered for the United States in a civil action brought by the Commission in the Federal District Court for the District of Columbia or for the district in which the violation occurs.
We held in San Huan New Materials High Tech, Inc. v. International Trade Commission, that the ITC has the authority to issue civil penalties for violation of a consent order. 161 F.3d 1347 (Fed. Cir. 1998).
The Commission based its penalty determination in this case on the six "EPROM factors" adopted by this court: (1) the good or bad faith of the respondent, (2) the injury to the public, (3) the respondent's ability to pay, (4) the extent to which the respondent has benefited from its violations, (5) the need to vindicate the authority of the Commission, and (6) the public interest. Certain Erasable Programmable Read Only Memories (EPROMs), Inv. No. 337-TA-276 (July 19, 1991). The Commission noted that the penalty was slightly more than a quarter of the statutory maximum of $100,000 per day. It found that the penalty was "appropriately proportionate to the value that the violative InReach devices bring to DeLorme" and consistent with the ITC's policy of deterring future violations while not driving DeLorme out of business.
DeLorme argues that the Commission abused its discretion by imposing a "grossly excessive" civil penalty. It argues that the penalty was not "proportionate" under the EPROM factors analysis. For example, it argues that the Commission incorrectly determined that DeLorme acted in bad faith. It also argues that in assessing the benefit of the violative sales to DeLorme, the Commission should have looked to the imported components' value rather than that of the devices as a whole.
The Commission did not abuse its discretion in imposing the penalty—which amounted to $27,500 per day for 227 violation days— substantially less than the statutory ceiling of $100,000 per violation per day. The Commission took into account the EPROM factors and we see no clear error in its fact findings or error in its application of the law. DeLorme has not shown, for example, that there was clear error in the Commission's findings regarding DeLorme's bad faith or that the violative sales greatly benefited DeLorme. We conclude that the Commission did not abuse its discretion in its penalty determination.
ePlus is Distinguishable Because, Here, the Underlying Consent Order was Final and Not Appealable
Finally, DeLorme argues that our recent decision in ePlus, Inc. v. Lawson Software, Inc., 789 F.3d 1349 (Fed. Cir. 2015) requires that the ITC's civil penalty in this case be reversed. In ePlus, we (1) vacated an injunction after the PTO cancelled the only patent claim on which the injunction was based, and (2) set aside the civil contempt sanction imposed for violation of the vacated injunction.
DeLorme's argument that ePlus controls this case is incorrect. ePlus held that a civil contempt sanction can be set aside when the underlying injunction, upon which the sanction is based, is still itself non-final or reviewable. As we explained in ePlus, "The rule for civil contempt for violating a provision of an injunction that is not final, i.e., that is still subject to litigation over the propriety of its issuance, is that the right to remedial relief falls with an injunction which events prove was erroneously issued." In ePlus, we determined that the injunction was not final (it was still subject to appellate review) at the time we were reviewing the civil contempt sanction and thus when the patent claims were cancelled, both the injunction and civil contempt sanction had to be vacated. In this case, in contrast, there is no question that the underlying Consent Order was final and not appealable. The Order itself states that "DeLorme shall be precluded from seeking judicial review or otherwise challenging or contesting its validity." Neither party has argued that the Order in this case, like the injunction in ePlus, was not final or appealable. Therefore, we reject DeLorme's argument that ePlus permits us to reject the civil penalty assessed in this case.
Judge Taranto Dissents from the Affirmance of the Penalty Order
I join the majority's determination that the ITC committed no reversible error in entering its order imposing penalties on DeLorme for violation of the patent-infringement-based Consent Order. Nevertheless, I dissent from the affirmance of the penalty order. After the penalty order was entered, indeed after DeLorme filed its opening brief in this appeal challenging the order, a district court held the relevant patent claims to be invalid, and today we affirm that invalidation in No. 2015- 1169. The ITC has not had an opportunity to consider the effect of the invalidation. I would remand this matter to the ITC for it to consider the effect of the invalidation on enforcement of the civil penalty for pre-invalidation violations of the Consent Order.
Advanced Steel Recovery, LLC v. X-Body Equip, Inc., Fed. Cir. Case 2014-1829 (November 12, 2015)
Advanced Steel appeals the summary judgment that X-Body and Jewell do not infringe its '950 patent. We affirm as to literal infringement and infringement under the doctrine of equivalents.
Advanced Steel's '950 patent is directed to the loading of shipping containers with bulk material for storage or transport. Material is loaded into the top of a container packer, which is moved along a transfer base by a hydraulically powered piston-and-cylinder unit towards a shipping container. A second piston-and-cylinder unit then pushes the material out of the packer and into the container by a push blade. Figure 10 of the '950 patent shows the container packer depicted as extending partly into a shipping container.
The claims of the '950 patent require that the first piston-and-cylinder unit be connected to the "transfer base proximate end" and the "container packer proximate end." In the Acculoader device, which Jewell manufactures and X-Body sells, the container packer piston-and-cylinder unit is connected to the floor of the container packer, approximately 35% down its length. The district court determined that the '950 patent did not contemplate a particular definition of the term "proximate end" so the ordinary meaning applies. The court then looked to a dictionary definition of "end" and construed the term as "the extreme or last part lengthwise." In doing so, the court rejected a construction of "proximate end" as "back half."
Turning to infringement, the court found that the connection point of the Acculoader container packer piston-and-cylinder unit is not at the proximate end, so does not literally infringe. On the doctrine of equivalents, the court determined that no reasonable jury could find the Acculoader's connection point to be equivalent to the container packer's proximate end. Accordingly, the court granted summary judgment of noninfringement as to both literal infringement and infringement under the doctrine of equivalents.
A. Claim Construction
On appeal, Advanced Steel faults the district court for too narrowly construing "proximate end" to mean the extreme or absolute edge of the container packer. Advanced Steel argues that the "proximate end" of the container packer should instead be construed as the "back half' or "the portion or region that is opposite the distal end." But the court did not actually construe "proximate end" as the "extreme edge," "absolute edge," or the like. Instead, the district court interpreted "proximate end" as "the extreme or last part lengthwise." Use of "or" is understood as meaning that the proximate end of the container packer includes not just the "extreme" end, but also the "last part." Indeed, the court's cited examples of common use of the term "end," such as "the rear end of an automobile," support this understanding.
As properly understood, the district court's construction is supported by the claims and specification. The specification does not expressly define "proximate end." Yet every figure that depicts the connection shows the packer piston-and-cylinder unit connected to the container packer at the extreme edge. See CVI/Beta Ventures, Inc. v. Tura LP, 112 F.3d 1146 (Fed. Cir. 1997) (Patent drawings are highly relevant in construing the claims.). The specification also depicts other "ends" as the structure's extreme edge.
Advanced Steel advocates against this construction by pointing to the connection in Figure 2 to argue that the "proximate end" is shown as offset from the absolute edge by as much as 10%. Thus, according to Advanced Steel, the district court's construction excludes this preferred embodiment. We do not find this argument persuasive. The district court's construction, understood as "the extreme or last part lengthwise," allows for the connection point to be offset from the absolute edge. We find the construction of "proximate end" to be consistent with the connection at the transfer base as depicted in the figures.
B. Literal Infringement
We affirm the summary judgment of no literal infringement. It is undisputed that the container packer piston-and-cylinder unit in X-Body's Acculoader is connected to the bottom of the container packer, approximately 35% down its length so we hold that no reasonable jury could find that the Acculoader's piston-and-cylinder unit is connected to the container packer's proximate end.
C. Infringement Under the Doctrine of Equivalents
While infringement under the doctrine of equivalents is a question of fact, "where the evidence is such that no reasonable jury could determine two elements to be equivalent, district courts are obliged to grant partial or complete summary judgment." Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17 (1997). "A patentee must provide particularized testimony and linking argument as to the insubstantiality of the differences between the claimed invention and the accused device or process, or with respect to the function, way, result test when such evidence is presented to support a finding of infringement under the doctrine of equivalents." Our case law also establishes that there are limitations to the doctrine of equivalents. Whether the result of the All Limitations Rule, prosecution history estoppel, or the inherent narrowness of the claim language, many limitations warrant little, if any, range of equivalents. "Vitiation" is not an exception to the doctrine of equivalents, but instead a legal determination that the evidence is such that no reasonable jury could determine two elements to be equivalent.
To survive summary judgment of noninfringement under the doctrine of equivalents, Advanced Steel had to present evidence of equivalence under each prong of the function-way-result test. Augme Techs., Inc. v. Yahoo! Inc., 755 F.3d 1326 (Fed. Cir. 2014). That a claimed invention and an accused device may perform substantially the same function and may achieve the same result will not make the latter an infringement under the doctrine of equivalents where it performs the function and achieves the result in a substantially different way. Here, Advanced Steel failed to meet its burden of showing that the Acculoader performs in substantially the same way as the claimed invention.
Advanced Steel's evidence on equivalence was submitted in the form of expert affidavits. In opining on the "way" prong of the function-way-result test, its expert stated that "there is no substantial difference between having a connection in the bottom middle and having a connection at the absolute back end" of the container packer because "in both cases, the container packer rides along horizontal guides, and the cylinder unit is hydraulically powered." But the features the expert points to—the guides and hydraulically powered piston-and-cylinder unit—are just additional claim elements. So his testimony, purporting to establish equivalence of "proximate end" with "floor," disregards the limitation at issue and merely points to satisfaction of other claim limitations. Doing so runs afoul of the "all-elements rule" articulated in Warner-Jenkinson. ("A focus on individual elements and a special vigilance against allowing the concept of equivalence to eliminate completely any such elements should reduce considerably the imprecision of whatever language is used."). Advanced Steel's attempt to establish that the Acculoader functions in substantially the same way as the invention by reference only to other claim elements does not satisfy its burden on the doctrine of equivalents. See AquaTex Indus., 479 F.3d at 1328 ("Generalized testimony as to the overall similarity between the claims and the accused infringer's product or process will not suffice.")
It is undisputed that the Acculoader's piston-and-cylinder unit is connected to the floor of the container packer approximately 35% away from the extreme proximate end. While the term "proximate end" by no means precludes some offset from the absolute end, we find no error in the district court's conclusion that "no reasonable jury could find this connection point to be equivalent to the 'container packer proximate end." In view of the evidence of equivalence presented here and the narrowness of the asserted claims, we find the range of equivalents does not extend to the connection point in the Acculoader. To find otherwise would ignore the precise and specific structural limitations in the claims. We thus conclude that the court did not err in granting summary judgment of noninfringement under the doctrine of equivalents.
Cubist Pharmaceuticals, Inc. v. Hospira, Inc., Fed. Cir. Cases 2015-1197, -1204, -1259 (November 12, 2015)
This case arose as a result of generic maker Hospira filing an ANDA with the FDA seeking to sell a generic equivalent of Cubist's Cubicin daptomycin product prior to expiration of Cubist's patents. This resulted in Cubist suing Hospira for infringement of five patents covering Cubicin. The five patents are directed to antibiotic compounds and formulations, dosage regimens for administering daptomycin, and methods of purification of daptomycin compositions. The district court held the claims of four of Cubist's patents invalid for anticipation and/or obviousness. As for the fifth patent, the court found the asserted claims not invalid and ruled that Hospira's proposed products infringed those claims. Both parties appeal.
Certificate of Correction or Improper Broadening/Recapture?
Hospira's appeal focuses on a certificate of correction granted to Cubist with regard to its '071 patent, which is a reissue of a '226 patent. The certificate corrected a diagram of the chemical structure of a compound described in the specification and recited in four of the claims of the '071 patent.
The specification of the '071 patent describes the daptomycin compound in three ways. First, it refers to the compound as "an A-21978C cyclic peptide" which peptides "are prepared from the A-21978C antibiotics," which are "a group of closely related, acidic peptide antibiotics" that are described in a '403 patent. The '403 patent in turn describes the A-21978C antibiotics as being produced by a process involving the fermentation of the bacterium Streptomyces roseosporus. The specification of the '071 patent also refers to the daptomycin compound by the code name LY146032, a code name that was known in the art to refer to daptomycin. Further, the specification states that daptomycin has a particular structure, however the structural diagram was inaccurate in that it mistakenly identified the stereoisomer of an asparagine amino acid as the "L" stereoisomer of asparagine, rather than the "D" stereoisomer.
At the time the application for the '226 patent was filed, and until well after that patent was issued, it was universally believed that the asparagine amino acid in daptomycin was the L-isomer of asparagine, as set forth in the structural diagram. Years after the issuance of the '226 patent, researchers discovered that daptomycin actually contains the D-isomer of asparagine, not the L-isomer. Cubist corrected the error by requesting a certificate of correction, explaining that the mistake as to the identity of the stereoisomer of asparagine was "the result of mischaracterization."
Hospira argued that the PTO erred by issuing the certificate of correction because the change in the structural diagram altered the substance of the claims, broadening their reach. Accordingly, Hospira argued that the '071 patent should be construed to be limited to the variant of the daptomycin compound containing the L-isomer of asparagine, which provides a much less potent antibiotic than daptomycin.
Once the PTO has issued a certificate of correction, a court may invalidate the certificate only upon a showing of clear and convincing evidence that it was improperly issued. In this case, no such showing was made. The district court did not view the change in the diagram as changing the scope of the claims. Instead, the court regarded the change as simply conforming the structural diagram to the compound described in the specification and covered by the claims.
The panel holds that in determining what compound the patent claims were directed to, the proper focus is not limited to the chemical structure depicted in a single diagram. Instead, the specification as a whole must be considered. The daptomycin compound was defined not only by the structural diagram, but also by other portions of the specification, which portions did not rely exclusively on the structural diagram to describe the compound. Specifically, the specification taught that daptomycin is obtained through fermentation of Streptomyces roseosporus through a process that necessarily results in daptomycin, not the variant with the L-isomer of asparagine. In addition, the specification described the claimed compound by the code name LY146032, which was regarded as referring to daptomycin, not the variant of daptomycin with the L-isomer of asparagine. Finally, at the time of filing, it was universally believed that the asparagine amino acid in daptomycin was the L-isomer of asparagine, not the D-isomer. It was not until well after filing that researchers determined that the previous understanding of the structure of daptomycin was mistaken.
Hospira next argued that the asserted claims of the '071 patent should be held invalid for violating the written description requirement of § 112. However, the panel held that the identification of the molecule in the specification was sufficient to inform a person skilled in the art that the inventors were in possession of the daptomycin molecule, even though the structure they ascribed to it was inaccurate in one respect.
Finally, Hospira argued that the asserted claims of the '071 patent are invalid because they violate the "recapture rule" applicable to reissued patents, which states that a patentee may not regain through reissue the subject matter that was surrendered in an effort to obtain allowance of the original claims. The recapture rule applies if (1) the reissue claims are broader than the original patent claims; and (2) the broader aspects of the reissued claims relate to subject matter that was surrendered in the prosecution of the original patent. Moreover, the recapture rule applies only if the patentee surrendered subject matter in the original prosecution in order to overcome a prior art rejection.
The panel holds that the reissue claims here did not violate the recapture rule because they were narrower than the original claims and the applicants did not surrender subject matter in the prosecution of the patent to avoid prior art. Thus, the panel rules that the certificate of correction did not broaden the asserted claims, that the asserted claims complied with the written description requirement, that the reissue did not violate the recapture rule, and that therefore the claims are valid.
Cubist cross-appealed from the portions of the judgment invalidating the other four patents at issue in this case. The panel affirms the judgment that all four of those patents are invalid for obviousness.
Inphi Corporation v. Netlist, Inc., Fed. Cir. Case 2015-1179 (November 13, 2015)
Inphi filed a request for inter partes reexamination of Netlist's ‘537 patent, and the examiner rejected claims 1-9, 12-31, and 34-44 as obvious. Netlist then narrowed its claims and the examiner withdrew the rejections. Inphi unsuccessfully appealed to the PTAB, alleging that the amendment, which introduced a negative claim limitation, failed to satisfy the written description requirement of § 112, paragraph 1.
The '537 patent, entitled "Memory Module with a Circuit Providing Load Isolation and Memory Domain Translation" relates to computer system memory modules. Conventional computer systems, such as a desktop PC or a laptop, are compatible with modular memory systems. Users may simply insert a memory module into a slot or socket in the motherboard of their personal computer. The '537 patent concerns random access memory ("RAM"), which provides short-term storage of data for active software programs. Greater performance and/or capacity RAM leads, in general, to a better performing computer.
The memory module itself comprises a printed circuit board, on which memory devices (also known as memory chips) are mounted. The memory devices—of which there can be up to eighteen, are attached to the printed circuit board. The specification discloses multiple memory device types, including "random-access memory (RAM), dynamic random-access memory (DRAM), synchronous DRAM (SDRAM), and double-data-rate DRAM (e.g., SDR, DDR-1, DDR-2, DDR3)."
The memory devices, therefore, can be of the Double Data Rate ("dDDR") Synchronous Dynamic RAM ("SDRAM") type. At issue is a negative claim limitation limiting the claimed chip selects to exclude three particular types of signals (CAS, RAS, and bank-address signals). Representative claim 1, as amended, is as follows:
1. A memory module comprising:
a plurality of memory devices, each memory device having a corresponding load; and
a circuit electrically coupled to the plurality of memory devices and configured to be electrically coupled to a memory controller of a computer system, the circuit selectively isolating one or more of the loads of the memory devices from the computer system, the circuit comprising logic which translates between a system memory domain of the computer system and a physical memory domain of the memory module, wherein the system memory domain is compatible with a first number of chip selects, and the physical memory domain is compatible with a second number of chip selects equal to twice the first number of chip selects, wherein the plurality of memory devices comprises double-data rate (DDR) dynamic random-access memory (DRAM) devices and the chip selects of the first and second number of chip selects are DDR chip selects that are not CAS, RAS, or bank address signals.
While the entire emphasized portion was added during reexamination, Inphi challenges only the underlined portion. Inphi contends, citing Santarus, Inc. v. Par Pharm., Inc., 694 F.3d 1344 (Fed. Cir. 2012), that the negative claim limitation added by amendment is not supported by the specification and thus constitutes impermissible new matter in violation of § 112, paragraph 1. Santarus states that "negative claim limitations are adequately supported when the specification describes a reason to exclude the relevant limitations."
The Board acknowledged that there is no reason for excluding RAS and CAS signals expressly articulated in the specification, but identified three parts of the specification upon which it relied in finding that the negative claim limitation was reasonably supported: "(1) consistency with JEDEC (a global standard setting body for the microelectronics industry) standards; (2) the '537 patent's excluding RAS and CAS signals in Table 2; and (3) various other passages from the '537 patent including Figure 9A."
The '537 patent incorporates by reference JEDEC standards for DDR-1 memory devices, namely the JEDEC Double Data Rate (DDR) SDRAM Specification ("JESD79D"). The JEDEC standard specifies that DDR signals (including CS, RAS, CAS, and bank address signals) are distinct from each other.
Alternative Features Set Forth in the Specification are Sufficient to Satisfy the Written Description Requirement for Negative Claim Limitations.
Substantial evidence supports a finding that the specification satisfies the written description requirement when the essence of the original disclosure conveys the necessary information—regardless of how it conveys such information, and regardless of whether the disclosure's words are open to different interpretations. Whether a patent claim satisfies the written description requirement of § 112, paragraph 1 depends on whether the description clearly allows persons of ordinary skill in the art to recognize that the inventor invented what is claimed. In particular, "negative claim limitations are adequately supported when the specification describes a reason to exclude the relevant limitation." Santarus.
At the heart of this appeal is whether the specification of the '537 patent provides a "reason to exclude" CAS, RAS, or bank address signals that is sufficient to satisfy the written description requirement embodied in Santarus. Inphi argues that Santarus requires "that the patentee describes a preference for the included signal(s) over the excluded signals (or alternatively a disadvantage of the excluded signals)." In other words that the specification identify the comparative advantage of the material remaining after any narrowing amendment. The question that remains is whether properly describing alternative features—without articulating advantages or disadvantages of each feature—can constitute a "reason to exclude" under the standard articulated in Santarus. We hold that it can.
When viewed in its proper context, Santarus simply reflects that the specification need only satisfy the requirements of § 112, paragraph 1, including through compliance with MPEP § 2173.05(i) ("If alternative elements are positively recited in the specification, they may be explicitly excluded in the claims.").
The "reason" required by Santarus is provided, for instance, by properly describing alternative features of the patented invention. That is not to say that in all cases, a patentee may arbitrarily dissect its invention by amending the claims in order to avoid the prior art. In this case, however, substantial evidence supports the Board's finding that the specification properly distinguishes the relevant signal types—CS, CAS, RAS, and bank address. Indeed, the parties agree that the disclosure in the '537 patent distinguishes among the relevant signal types, but simply disagree about whether that distinction creates a "reason to exclude" that satisfies the requirements of § 112, paragraph 1. The Board's review of the specification makes it clear that there was substantial evidence that Netlist possessed the negative claim limitation as of the filing date, as is evidenced through the Board's reliance on the JEDEC standard, Table 2, and other various passages in the specification, including Figure 9A.
We affirm the Board's finding, and hold that Santarus did not create a heightened written description standard for negative claim limitations and that properly described, alternative features are sufficient to satisfy the written description standard of § 112, paragraph 1 for negative claim limitations.