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Latest Federal Circuit Court Cases, 5/14/18

May 14, 2018

Overview

PATENT CASE OF THE WEEK 

WesternGeco LLC v. Ion Geophysical Corp., Appeal Nos. 2016-2099, -2100, -2101, -2332, -2333, -2334 (Fed. Cir. May 7, 2018)

In an appeal from an inter partes review, the Federal Circuit affirmed the PTAB’s unpatentability determinations as well as the Board’s conclusion that the proceedings were not time-barred under 35 U.S.C. § 315(b).  Under § 315(b), the USPTO may not institute an IPR where the petition “is filed more than 1 year after the date on which the petitioner, the real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.”  The case primarily concerned whether a defendant in a parallel district court litigation is a privy of the IPR petitioner, or the real party in interest, in an IPR.

Patent owner WesternGeco LLC alleged infringement of several marine seismic streamer patents against ION Geophysical Corp.  At trial, a jury found the patents infringed and not invalid.  WesternGeco subsequently asserted the patents against Petroleum Geo-Services (PGS), who then filed the underlying IPRs.  ION moved to join those proceedings, over the objections of WesternGeco and PGS.  The Board granted ION’s request, but restricted its role to “spectator” status.

The Board issued final written decisions that the various claims were either anticipated by or would have been obvious over several prior art references.  WesternGeco appealed, arguing that the IPR was time-barred pursuant to 35 U.S.C. § 315(b) because ION was a “real party in interest” or a “privy of” PGS.  WesternGeco’s time-bar challenge focused on “privity” rather than “real party in interest” because the privity analysis is “more expansive in the types of parties it encompasses.”

The Court rejected WesternGeco’s argument that the Board had focused only on whether ION had control over the IPR proceedings.  Instead, in determining whether PGS and ION are privies, the Court found that there was substantial evidence that: (1) there was no evidence that ION directed, funded, or controlled PGS’s IPR petitions; (2) ION and PGS are distinct and unrelated corporate entities; (3) a customer-manufacturer relationship is insufficient to find privity; and (4) the agreement stating that ION “shall indemnify” PGS is too ambiguous to establish privity.  As such, substantial evidence supported the Board’s conclusion that “ION’s relationship with PGS is not sufficiently close such that the ION proceeding would have given PGS a full and fair opportunity to litigate the validity of the claims of the WesternGeco patents.” The Court opined that as a general proposition, “a common desire among multiple parties to see a patent invalidated, without more, does not establish privity.” Because PGS and ION are not privies within the meaning of § 315(b), the petitions were not time-barred.  For a similar outcome, see our write-up of the Wi-Fi One case, here.

The Court also reviewed the merits of WesternGeco’s appeal.  The Federal Circuit found that the patents, which involve control and positioning technologies for geological exploration of the ocean floor, were unpatentable as either anticipated or obvious. For each of the patents, the Board correctly interpreted the claims and substantial evidence supported the Board’s unpatentability findings.

It should be noted that the district court case, which was already appealed, is currently pending at the Supreme Court on the issue of extraterritorial damages.  Oral argument was held last month.  It is unclear what effect the invalidity of numerous claims that were the basis of the district court litigation will have on the Supreme Court case.

Opinion can be found here.

ALSO THIS WEEK

Altaire Pharmaceuticals, Inc. v. Paragon Bioteck, Inc., Appeal No. 2017-1487 (Fed. Cir. May 2, 2018)

In an appeal from a post-grant review, the Federal Circuit addressed multiple issues concerning standing on appeal and PTAB compliance with the Administrative Procedures Act.  The Federal Circuit has previously analyzed the limits on when parties who lose PTAB AIA reviews have Article III standing to appeal their losses.  The Federal Circuit held that the petitioner had Article III standing to bring the appeal, notwithstanding that it may not launch a product for years.  In a lengthy analysis, the Court found that petitioner had suffered injury in fact, in part because of the impact of the AIA’s estoppel provisions.  The Court also held that petitioner’s reply evidence was admissible because it responded to objections raised by the patent owner in its response brief.  Judge Schall dissented on the issue of standing.  For more on that issue, see our write-up on Phigenix, Inc. v. Immunogen, Inc., here.

Opinion can be found here.

AIDS Healthcare Foundation, Inc. v. Gilead Sciences, Inc., Appeal No. 2016-2475 (Fed. Cir. May 11, 2018)

In an appeal from a district court dismissal of a declaratory judgment suit, the Federal Circuit affirmed that declaratory judgment jurisdiction had not been established.  AIDS Healthcare had sought a declaratory judgment that Gilead’s and others’ patents covering medications for persons with AIDS were invalid.  It argued that it had induced others to infringe by asking generic drug manufacturers to make infringing drugs, that Gilead had not responded to a request for a covenant not to sue, and that public policy favors invalidation of weak patents.  The Federal Circuit found that none of these facts was sufficient to establish declaratory judgment jurisdiction.

Opinion can be found here.

In re HTC Corp., Appeal No. 2018-130 (Fed. Cir. May 9, 2018)

In denial of a writ of mandamus, the Federal Circuit issued two critical holdings in the evolving jurisprudence concerning venue following the Supreme Court’s decision in TC Heartland.  First, the Court held that a denial of a motion to transfer venue under 28 U.S.C. § 1406 is generally not appropriate for a writ of mandamus.  Distinguishing from motions to transfer for the convenience of the parties under 28 U.S.C. § 1404, denials for improper venue under § 1406 are subject to appeal in the ordinary course and a reversal of any judgment on improper venue grounds.  Section 1404 motions are not subject to such a remedy, and errors by district courts in a § 1404 analysis may be harmless error by the time the case is tried and appealed.  Therefore, mandamus may be the only path for relief in a § 1404 venue dispute.  The Court did not explain when a writ of mandamus may be appropriate for the denial of a § 1406 motion, but hints may be found in the few recent cases where the Federal Circuit has done as much.  See our write-ups of In re Cray here, and In re Micron here, in both of which the Federal Circuit granted mandamus following the denial of a motion to transfer venue under § 1406. 

The Court also held that foreign defendants, who are not referenced in the patent venue statute, 28 U.S.C. § 1400(b), can be sued in any district.

Case available here.

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