PATENT CASE OF THE WEEK

Myco Industries v. BlephEx, LLC, Appeal No. 2019-2374 (Fed. Cir. April 3, 2020)

This week’s Case of the Week concerns issues relating to free speech in the patent infringement context. In an appeal from the United States District Court for the Eastern District of Michigan, the Federal Circuit, finding an abuse of discretion, reversed and vacated the district court’s entry of a preliminary injunction against BlephEx, which would have enjoined the company from making allegations of patent infringement against Myco and from threatening litigation against Myco’s potential customers.

As background, BlephEx owns U.S. Patent No. 9,039,718 (“the ’718 patent”), which covers a method and electromechanical device with a swab for treating certain disorders of the eyelid. During prosecution, the applicant—inventor Dr. James Rynerson—amended the claims to overcome certain prior art, explaining that the claimed swab, unlike the prior art, is capable of contacting the inner edge of the eyelid. After submitting those amendments, and to receive a notice of allowance, the applicant also added a limitation requiring the claimed swab to contact the portion of the eye between the eye lashes and the inner edge of the eyelid.

After the ’718 patent issued, Rynerson partnered with John Choate to commercialize the patent by developing a product for cleaning the eyelid, which they called the BlephEx. It was brought to market in 2013, and in 2014, Choate ended the relationship with Rynerson. Choate later became chairman of Myco, and in 2019, Myco began marketing a product called the AB Max—an FDA registered device used to treat a disease of the eyelid called anterior blepharitis. In 2019, Rynerson and Choate both hosted booths for their respective companies at an optometry trade show. Myco, via Choate, displayed the AB Max tool and handed out marketing materials, which promoted the tool for treating anterior (not posterior) blepharitis. Rynerson approached Choate at the Myco booth, expressing concern about the AB Max device. Choate contends that Rynerson accused the device of infringing the ’718 patent, making accusations of infringement while potential customers were nearby. Rynerson denies Choate’s version of the events, and contends that he merely asked if Choate thought the AB Max might infringe the ’718. Rynerson also contends that he never threatened to sue anyone for patent infringement.

As a result of the above interaction, in March 2019, Myco filed the underlying action against BlephEx, seeking declaratory judgment of non-infringement and invalidity of the ’718 patent. Myco also filed a motion for preliminary injunction seeking to prevent BlephEx from making false allegations that the AB Max product infringes the ’718 patent, and from making baseless threats against Myco’s potential customers. As to the preliminary injunction, Myco alleged it had a strong likelihood of success on the merits of its non-infringement claims because (1) during prosecution, the patent claims were limited to a method for treating posterior blepharitis, whereas the AB Max product is to be used for anterior blepharitis; and (2) its medical practitioner customers are immune from liability under 35 U.S.C § 287(c)(1). BlephEx disagreed that the claims were so limited, and argued that Myco’s immunity argument improperly relied on the assumption that all direct infringers were medical professionals. BlephEx moved for leave to file supplemental briefing, arguing that a showing of bad faith was required to bar a patentee’s speech, but the district court denied the motion for leave.

In looking at likelihood of success on the merits, the district court found that because the patent claimed a method wherein the swab of the BlephEx product contacted the inner edge of the eyelid, and because the patentee amended the claims specifically to add this language, the patent was effectively limited to a method for treating posterior blepharitis, which is a disease of the inner—rather than outer/anterior—edge of the eyelid. The AB Max product, on the other hand, treats anterior blepharitis, and therefore, the district court found a strong likelihood of no direct infringement. The district court also found no indirect infringement, and based its opinion on its limitation of the claims to treatment of posterior blepharitis. The district court also agreed that Myco’s medical practitioner customers would be immune from liability, and that because it had already determined that the AB Max does not directly or indirectly infringe the ’718 patent, there is also a strong likelihood of success that Myco’s non-medical practitioner customers were not liable for infringement. The district court ultimately granted Myco’s motion for preliminary injunction, enjoining BlephEx from making allegations of patent infringement generally, and from threatening litigation against Myco’s potential customers.

In reversing the grant of preliminary injunction, the Federal Circuit first explained that when a preliminary injunction prevents a patentee from communicating its patent rights, federal patent law and precedent relating to notice of patent rights applies. In such cases, the grant of a preliminary injunction is to be reviewed in the context of whether the notice of patent rights was properly given, and federal law requires a showing of bad faith before a patentee can be enjoined from so communicating. Bad faith must be supported by a finding that the claims asserted were objectively baseless. As such, the Court held that the district court abused its discretion in granting the preliminary injunction without a finding of bad faith. That BlephEx did not argue no bad faith is irrelevant—the Court explained that while a party can waive his or her ability to appeal a ruling, there can be no waiver of a judge’s duty to apply the correct legal standard, and here, the district court neither made a finding of bad faith nor even adverted to the requirement. Moreover, the district court expressly declined to find that any of BlephEx’s statements during the trade show were false or misleading.

Myco argued that the district court’s analysis, which did not include a finding of bad faith, was nevertheless appropriate because the injunction simply precludes BlephEx from alleging infringement and threatening litigation against Myco’s potential customers who are immune from infringement under § 287(c)(1). Myco also argued that under its reading of the injunction, because its customers are allegedly immune from infringement, bad faith on the part of BlephEx should be inferred. The Court disagreed, and explained that the injunction is not so narrow—it enjoins BlephEx from both (1) making allegations of infringement generally and (2) threatening litigation against Myco’s potential customers. Moreover, Section 287(c) does not blanketly preclude a patent owner from stating that a medical practitioner’s performance of a medical activity infringes a patent, nor does the plain text of the statute even state that a medical practitioner is “immune from infringement” as Myco contends. Rather, the statute states that if there is infringement by a medical practitioner, the patentee cannot seek a remedy for infringement against the practitioner or related health care entity. Further, such conduct can still form the basis for a claim of indirect infringement of method claims against a device manufacturer. As such, Myco needed to have established that BlephEx’s patent infringement statements, whether made generally or to medical practitioners, were objectively baseless; it did not.

Finally, the Court vacated the district court’s conclusion that Myco had a strong likelihood of success on the merits of its non-infringement claim because it was predicated on improper claim construction. Specifically, the district court erred in limiting the claims to a method for treatment of posterior blepharitis because the plain language of the claims did not so state, nor do they state that the claimed swab must contact the inner edge of the eyelid. Rather, the claims merely recite a swab that has a portion configured to access an inner edge portion of the eyelid, but such access or contact is not required. Moreover, the district court did not decide whether the patentee had clearly and unmistakably disavowed any claim scope during prosecution, which would have been required for such a departure from the meaning of the term provided in the claims and written description. Finally, the Court found that the district court frequently conflated the invention claimed in the ’718 patent with the BlephEx product, which is improper in both infringement and claim construction analyses.

The opinion can be found here.

ALSO THIS WEEK:

Intellisoft, Ltd. v. Acer America Corp., Appeal No. 2019-1522 (Fed. Cir. April 3, 2020)

In an appeal from the U.S. District Court for the Northern District of California, the Court addressed whether removal under 28 U.S.C. §§ 1441 and 1454 was proper. Intellisoft had brought various state law claims, including claims for misappropriation of trade secrets derived from certain patents filed and owned by Acer, against Acer in California state court. On the eve of trial, Acer filed counterclaims for declaratory relief of patent inventorship, without obtaining leave from the court for the late filing, and removed the action to the federal court. The district court subsequently denied Intellisoft’s motion to remand and granted summary judgement in favor of Acer. The Court first held that Intellisoft’s “reliance on a patent as evidence to support its state law claims does not necessarily require the resolution of a substantial patent question” and was insufficient for removal under section 1441. Next, the Court held that Acer had not obtained the requisite leave from the state court to file its counterclaims, so the counterclaims were not yet “asserted” as required for removal under section 1454. The Court held that removal under section 1454 “requires that the claim supporting removal must be contained in an operative pleading.” Thus, the Court vacated the district court’s judgment, reversed its denial of Intellisoft’s motion to remand, and remanded the action to California state court.

The opinion can be found here.

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