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Latest Federal Circuit Court Cases, 5/7/18

May 7, 2018

Overview

Texas Advanced Optoelectronic Solutions, Inc. v. Renesas Electronics America, Inc., Appeal Nos. 2016-2121, -2208, -2235 (Fed. Cir. 2018)

In an appeal from a jury trial, the Federal Circuit addressed numerous issues relating to both patent law and trade secret law, including constitutional questions about the roles of judges and juries.  The case involved allegations of patent infringement, trade secret misappropriation, breach of contract, and tortious interference with prospective business relations under Texas state law.  In particular, Texas Advanced Optoelectronic Solutions, Inc. (“TAOS”) alleged that Intersil Corporation (“Intersil”) had improperly used technical designs it had disclosed in previous failed merger negotiations.   

Under Texas law, a remedy for trade secret misappropriation is disgorgement of profits.  The district court allowed the jury to determine the defendant’s profits.  The defendant argued that the judge should have taken the jury’s verdict as merely advisory, since there is no constitutional right to a jury trial on disgorgement.

The Federal Circuit reversed, holding that there was no Seventh Amendment right to a jury trial where the claim was for disgorgement of profits.  Specifically, the Court provided a detailed analysis of “whether the jury or the court is to decide whether to award disgorgement and, if so, what amount to award,” providing a lengthy historical analysis dating back to the enactment of the Bill of Rights.

The Court found that patent, trademark and copyright laws were appropriate analogues for Seventh Amendment purposes.  It held that no disgorgement remedy for patent, trademark or copyright infringement was available in 1791.  Consequently, it concluded “that no such remedy would have been available at law for the trade secret misappropriation here, either.”  Accordingly, the Court held that the district court judge had erred by allowing a jury to decide the disgorgement amount, and not treating it as merely advisory, and the Federal Circuit vacated that award and remanded for a determination by the district court. 

With respect to the patent infringement issues, the products at issue had multiple modes, and only Mode 3 practiced all of the claim limitations.  But there was no evidence that the products were ever used in Mode 3.  Both method and apparatus claims were asserted.  The Court held that there could be no infringement of the method claims because there was no evidence that the accused products operated in Mode 3.  Thus, there was no evidence of direct infringement of these method claims, and there could be no liability.  However, the Court upheld infringement of the apparatus claims because those claims required only devices that be capable of operating in Mode 3 and “[a]lthough infringement of the apparatus claims requires that Intersil’s products have the ability to perform in Mode 3, infringement does not require actual use of Intersil’s products in Mode 3.”  While Intersil argued that the chips used in its product did not have Mode 3, the Court found there was sufficient evidence for the jury to find otherwise.

The District Court also denied the request for a permanent injunction on the basis that TAOS had not shown irreparable harm.  In coming to this conclusion, the District Court found that “because TAOS had requested a reasonable royalty as compensation for past infringement, a reasonable royalty should be adequate to compensate TAOS for future infringement.”  The Federal Circuit found that this was an insufficient analysis, and vacated the denial of an injunction and remanded for further consideration. 

Finally, the Court upheld the District Court’s finding that there was sufficient evidence showing that a majority of sales were extraterritorial sales, but vacated the parts of the decision relating to enhanced damages and duplicative damages.

Opinion can be found here.

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Energy Heating LLC v. Heat on-the-Fly, LLC, Appeal Nos. 2016-1559, -1893, -1894 (Fed. Cir. 2018)

In an appeal from the judgment of inequitable conduct, the Federal Circuit affirmed.  The district court found a patent unenforceable because the patentee did not disclose public use of the invention to the Patent and Trademark Office during prosecution. Applying the Allen Engineering indicia of experimental usage factors, the Federal Circuit held that the patentee’s prior commercial sales of the invention were not experimental. The Court also upheld the district court’s judgment of tortious interference and vacated the district court’s denial of attorneys’ fees under § 285.

Opinion can be found here.

 The General Hospital Corporation v. Sienna Biopharmaceuticals, Inc., Appeal No. 2017-1012 (Fed. Cir. 2018)

In an appeal from an interference proceeding, the Federal Circuit vacated and remanded the PTAB’s dismissal on grounds stemming from a written description issue in a case dealing with the import of various ranges of nanoparticle concentrations in the specification and claims.  The Court held that PTAB did not err in finding that a claim lacked written description support where the specification disclosed a broad range and the claims recited a narrower range, because the broader disclosure did not permit one skilled in the art to “immediately discern the limitation at issue in the claims.”  However, the Court vacated the PTAB’s denial of the applicant’s motion to add a new claim, finding to be “arbitrary and capricious” the Board’s summary determination that the applicant’s certification of patentability, made pursuant to the Board’s Standing Order, was not a sufficient showing of patentability.  The Court also found error in the PTAB’s determination that the applicant had not shown interference-in-fact, because the proposed new claim was directed to a concentration included in the range claimed by the later-filed patent, and would have rendered the later-filed claim obvious.

Opinion can be found here.

In re: Jeff H. VerHoef, Appeal No. 2017-1976 (Fed. Cir. 2018)

In an appeal from a Patent Trial and Appeal Board (the Board) decision to sustain an examiner’s rejection of claims under 35 U.S.C. § 112(f), the Federal Circuit affirmed.  The applicant had admitted that a significant contribution to the invention had come from another person.   The Federal Circuit held that a patent cannot be granted on an application that does not list all inventors.  The Federal Circuit was not persuaded by VerHoef’s argument that a previous Board decision, Morse v. Porter, 155 U.S.P.Q. 280 (B.P.A.I. 1965) permitted a person to be named as a sole inventor even if that person did not conceive of each feature of the claimed invention, as long as the person maintained “intellectual domination” and control over the inventive process.  The Federal Circuit explained that Porter is not binding on the court, and also mentioned that in Porter the Board could not “tell from the evidence which of [two persons] first suggested” a claimed feature.  In this case, all parties agreed that another person first suggested a claimed feature of the application to VerHoef.

Opinion can be found here.

Disc Disease Solutions Inc. v. VGH Solutions, Inc., Appeal No. 2017-1483 (Fed. Cir. 2018)

In an appeal from a district court dismissal with prejudice, the Federal Circuit reversed.  The Court held that the complaint alleged facts sufficient to state a claim under the Iqbal/Twombly standard, because the case involved a “simple technology,” and the complaint “specifically identified the three accused products . . . and alleged that the accused products meet each and every element of at least one claim . . .”

 Opinion can be found here.

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