Lite-Netics, LLC v. Nu Tsai Capital LLC, Appeal No. 2023-1146 (Fed. Cir. Feb. 17, 2023)
In an appeal from the U.S. District Court for the District of Nebraska, the Federal Circuit addressed whether the district court properly granted a preliminary injunction restricting Lite-Netics, LLC’s patent-related speech. The Federal Circuit held that the district court abused its discretion in issuing the preliminary injunction because the applicable speech-protective legal standards were not met, vacating the preliminary injunction and remanding.
Lite-Netics competes with Nu Tsai Capital, LLC d/b/a Holiday Bright Lights (“HBL”) in the market for holiday string lights. Lite-Netics’s patent at issue describes light-fixture assemblies, with each assembly having a magnetic base for easy mounting to metal surfaces. The patent is depicted with one disk magnet on the base of the light fixture assembly. HBL sells two products, both of which Lite-Netics allege infringe its patent. The first product contains a light-fixture assembly with two half-disk magnets in the base (the “Magnet Cord”). The second product is not a light-fixture assembly, but a dual-clip unit containing a single magnet that is designed to be put on the bottom of a light socket by clipping the unit to the wires coming out of the socket (the “Magnetic Clip”).
Lite-Netics brought a patent-infringement action against HBL in the U.S. District Court for the District of Nebraska related to the Magnetic Cord and Magnetic Clip. Prior to filing the lawsuit, Lite-Netics sent notices to its customers, some of which were also HBL customers, informing them of allegedly infringing competitors in the market and stating Lite-Netics’s intent to enforce its patent rights. Lite-Netics did not name HBL. After filing suit, Lite-Netics sent additional notices to its customers, this time identifying HBL as an allegedly infringing competitor. After the second notice was sent, HBL filed counterclaims, including for state-law torts, and moved for a temporary restraining order and a preliminary injunction against certain speech by Lite-Netics about its patents. The district court issued a preliminary injunction that barred Lite-Netics from suggesting that HBL is a patent infringer, that HBL has copied Lite-Netics’s lights, or that HBL customers might be sued. Lite-Netics appealed.
On appeal, the Federal Circuit first turned to whether HBL’s state-law claims survive federal preemption, which acts to preempt state-law tort liability for a patent holder’s good faith conduct in communications asserting infringement of its patent and warning about potential litigation. As the Court explained, HBL’s state-law claims can only survive federal preemption to the extent that those claims are based on a showing of bad faith action in asserting infringement. According to the Court, the bad-faith standard cannot be satisfied absent a showing that the claims asserted are objectively baseless. Applying this standard, the Federal Circuit found that Lite-Netics infringement allegations were not objectively baseless.
The Federal Circuit first addressed HBL’s contention that the infringement allegations were objectively baseless because the patent at issue utilizes a single magnet socket base with a unitary structure, whereas the Magnet Cord has two half-disk magnets at the base. The Court concluded it saw no basis for deeming objectively unreasonable an assertion that two such pieces would be understood by a relevant artisan as a single magnet, whether as a matter of claim construction or as a matter of application.
Next, the Federal Circuit addressed the district court’s application of the doctrine of equivalents. Before the district court, Lite-Netics argued that even if “a magnet” in the claims meant a single (unitary-structure) magnet, the two semicircular magnets in the Magnetic Cord light-fixture bases are equivalent to the one magnet recited in its asserted patents. The district court found this argument to be objectively baseless, and did so without addressing the merits of whether the two magnets in the Magnetic Cord performed substantially the same overall function or work, in substantially the same way, to produce substantially the same overall result. The Federal Circuit disagreed with district court finding, holding instead that there was nothing unreasonable about the allegation that HBL’s two half-disk magnets satisfy the function-way-result formulation for equivalence with the single magnet claimed by the patent. In so holding, the Federal Circuit also rejected HBL’s argument that the prosecution history of the patent estopped Lite-Netics from contending that the two half-disk magnets used by the Magnet Cord meet the claim limitation under the doctrine of equivalents. The Federal Circuit found nothing in the prosecution history that was so clearly applicable that it was objectively baseless for Lite-Netics to assert infringement under the doctrine of equivalents.
Finally, turning the Magnetic Clip, the Federal Circuit addressed the district court’s holding that Lite-Netics’s infringement allegations were objectively baseless because the Magnetic Clip does not “attach” to the light fixture but rather “pockets” the bottom of the socket because the arms of the clip attach to the wires on either side of the base. The Federal Circuit found it was not objectively baseless for Lite-Netics to contend that “attach” is broad enough to cover connecting without fastening. The Federal Circuit also rejected the district court’s finding that the infringement allegations as to the Magnetic Clip were objectively baseless because the patent disclaimed “clips” and “external ‘clips’ that attach to the electrical cord.” The Federal Circuit found it was at the least reasonable not to find a disclaimer in the specification that would exclude the Magnetic Clip because the disclaimer was not as broad the district court interpretation, which encompassed “all clips.”
The opinion can be found here.
By Mario E. Delegato
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SSI Technologies, LLC v. Dongguan Zhengyang Electronic Mechanical Ltd., Appeal Nos. 2021-2345, 2022-1039 (Fed. Cir. Feb. 13, 2023)
In an appeal from a district court summary judgment opinion, the Court issued a wide-ranging opinion covering a number of issues, one of which relates closely to our Case of the Week, above.
SSI asserted two patents concerning emission-reduction systems for diesel truck engines. DZEM counterclaimed state-law torts for SSI’s notices to domestic and foreign companies advising them of the lawsuit. The district court provided claim constructions and, based on those claim constructions, found that the patents were not infringed. The court then dismissed the invalidity counterclaims. The court also granted summary judgment to SSI on the tort claims under the Noerr-Pennington doctrine (for countries where SSI enjoyed patent protection) and for failure to establish any evidence of prospective contracts (for companies in other countries).
The Federal Circuit affirmed the district court’s determinations with respect to one of the patents. With respect to the second, the Court reversed because the Court construed “filter” so as to preclude DZEM’s embodiment having four holes rather than a mesh or similar “filter” mechanism. The Federal Circuit held that the patent did not preclude the idea of a “filter” being four holes, and accordingly vacated the invalidity determination associated with that patent. With respect to the state-law torts, the Court affirmed because a patent litigation must be baseless for communications about the litigation to implicate state-law torts, and there was a failure of evidence that the case was objectively baseless. Statements to companies in foreign countries were also covered because the letter referenced only the U.S. patent, and foreign companies can infringe U.S. patents if they make, use, or sell products in the U.S.
The opinion can be found here.
By Nika Aldrich
Hawk Technology Systems, LLC v. Castle Retail, LLC, Appeal No. 2022-1222 (Fed. Cir. Feb. 17, 2023)
In this case, the Federal Circuit affirmed a Tennessee district court’s Rule 12(b)(6) dismissal of infringement claims on grounds that asserted U.S. Patent No. 10,499,091 was directed to patent-ineligible subject matter under 35 U.S.C. § 101. The district court had reached its decision after conducting a “technology briefing” at which it received argument concerning the § 101 issue, and was presented with prior art references and witness statements concerning, inter alia, the conventionality of the patent’s recited steps. Patentee Hawk argued that it was procedurally improper for the court to dismiss the claims in this posture, and that it should have converted the motion to dismiss into a motion for summary judgment under Rule 56 to permit the parties to take full discovery into factual issues underlying the court’s determination.
Applying Sixth Circuit law, the Federal Circuit found that the district court erred in failing to convert the Rule 12(b)(6) motion into a motion for summary judgment, but that the error was harmless on the record presented. Specifically, the district court expressly based its findings on the pleadings and intrinsic record, and did not purport to rely on extraneous information presented at the technology briefing. The Federal Circuit agreed that the ’091 patent—which was directed to methods of viewing multiple video images—was directed to abstract ideas such as “displaying images, converting them into a format, transmitting them, and so on,” and that the broad functional language of the claims did not impart any inventive concept. Because the district court’s decision was based on and supported by only matters intrinsic to the pleadings, the Federal Circuit affirmed dismissal.
The opinion can be found here.
Minerva Surgical, Inc. v. Hologic, Inc., Appeal No. 2021-2246 (Fed. Cir. Feb. 15, 2023)
In this case, the Federal Circuit affirmed a district court’s grant of summary judgment that asserted claims of Minerva Surgical’s U.S. Patent No. 9,186,208 were invalid as anticipated under the on-sale bar of pre-AIA 35 U.S.C. § 102(b). The claims were directed to devices for performing endometrial ablation (a type of uterine surgery), which the patentee had demonstrated at a trade event described as the “Super Bowl” of the industry more than one year prior to the priority date of the patent. The Court found that the undisputed facts showed the device was both “in public use” and “ready for patenting,” and so affirmed the district court’s grant of summary judgment.
Notably, the Court rejected the patentee’s argument that the demonstration device was not “ready for patenting”—or that there was any genuine factual dispute on that issue—because it allegedly did not yet work for its “intended purpose of performing ablations on ‘live human’ uteri.” The Court explained that nothing in the intrinsic record of the ’208 patent indicated that it was limited to use only on live human tissue, and that even if there were, Minerva’s own internal documentation stated that the device was ready for clinical testing by the time of the demonstration. The Court further equated Minerva’s argument to an argument that the device was not “ready for patenting” because it was not “ready for FDA approval,” which the Federal Circuit had previously rejected.
Apart from having been reduced to practice, the Court also found that the device was “ready for patenting” for the independent reason that Minerva had generated enabling documentation such as CAD drawings that would permit a person of ordinary skill in the art to make and use the invention. The Court also rejected Minerva’s argument that the device was not “in public use” because it was not physically handled by event attendees, finding that the evidence showed it was demonstrated sufficiently to permit persons skilled in the art to understand the invention under no obligations of confidentiality.
The opinion can be found here.
Chromadex, Inc. v. Elysium Health, Inc., Appeal No. 2022-1116 (Fed. Cir. Feb. 13, 2023)
In an appeal from a district court summary judgment order, the Federal Circuit affirmed that a patent directed to dietary supplements was ineligible under Section 101. The patent claimed a dietary supplement that included various ingredients found in milk plus “isolated nicotinamide riboside [NR].” While NR is found in milk, isolated NR is not. The district court found the patent ineligible for claiming a law of nature. The Federal Circuit affirmed, holding that the patent was ineligible under the Supreme Court’s decisions in Ass’n for Molecular Pathology v. Myriad Genetics, Inc. or Diamond v. Chakrabarty. The Court then discussed whether it was necessary to consider the Court’s two-step framework from Alice Corp. Pty. Ltd. v. CLS Bank Int’l, and concluded it was not, given that the Court in Myriad did not engage in that two-step analysis. But even if the two-step analysis was required, the Federal Circuit held that the patent was directed to ineligible subject matter at step one, and did not have a sufficient inventive step under step two.
The opinion can be found here.
By Nika Aldrich
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This article summarizes aspects of the law and does not constitute legal advice. For legal advice for your situation, you should contact an attorney.
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