Federal Circuit Year in Review

13th Annual Utah IP Summit, Salt Lake City

February 2011

Esther H. Lim, Managing Partner

Shanghai Representative Office

Finnegan, Henderson, Farabow, Garrett & Dunner, LLP

22

THE U.S.SUPREME COURT

33

PATENTABLE SUBJECT MATTER:

BILSKI

PROCESS

MACHINE

MANUFACTURE

COMPOSITION OF MATTER

44

Bilski v. Kappos130 S. Ct. 3218 (2010)

• Holdings by the Supreme Court on June 28, 2010– The machine-or-transformation test is not the sole test to determine

patentability of processes– Business methods are not categorically excluded from patentability– Bilski’s claims recite an unpatentable abstract idea

• “In disapproving an exclusive machine-or-transformation test, we by no means foreclose the Federal Circuit’s development of other limiting criteria that further the purposes of the Patent Act and are not inconsistent with its text.”

55

Post-Bilski: USPTO Memorandum on June 28, 2010

• Section 101 is broad, but not without limit – three specific exceptions are laws of nature, physical phenomena, and abstract ideas

• Examiners to continue using machine-or-transformation test, but it is not the sole test

• Business methods are, at least in some circumstances, patent-eligible under Section 101

66

Post-Bilski: Supreme Court Decisions on June 29, 2010

• Classen Immunotherapies, Inc. v. Biogen IDEC– Federal Circuit had affirmed decision that a process for identifying lower-risk

vaccine schedules is not patent-eligible under Section 101– Supreme Court granted certiorari, vacated judgment of Federal Circuit, and

remanded for further consideration in light of Bilski

• Ferguson v. PTO– Federal Circuit had affirmed decision that a method for marketing a product

using a shared marketing force is not patent-eligible under Section 101– Supreme Court denied certiorari

• Mayo Collaborative Services v. Prometheus Laboratories, Inc.– Federal Circuit had reversed decision that a method for calibrating drug

dosage is not patent-eligible under Section 101– Supreme Court granted certiorari, vacated judgment of Federal Circuit, and

remanded for further consideration in light of Bilski

77

Post-Bilski: Prometheus

• On remand, the Federal Circuit held that the method claims for calibrating drug dosage were patent eligible

• Noted that the claims were drawn to a particular application of a natural phenomenon, rather than to the phenomenon itself

• Concluded that the asserted method claim satisfied the preemption test as well as the transformation prong of the machine-or-transformation test

88

INTERNATIONAL EXHAUSTION:

COSTCO V. OMEGA

99

Costco Wholesale Corp. v. Omega, S.A.131 S. Ct. 565 (2010)

• Omega sued Costco for copyright infringement based on Costco’s sale of Omega’s watches with a logo on back

• Costco asserted the first-sale doctrine, arguing that Omega’s initial sale of the watches in Switzerland precluded infringement

• 9th Circuit Court of Appeals concluded that according to their precedential interpretation of the statute, the first-sale doctrine does not apply to U.S. copyrighted materials that have not been lawfully sold in the U.S.

• Supreme Court affirmed without a written opinion

1010

INDUCEMENT:GLOBAL-TECH V. SEB

1111

Global-Tech Appliances, Inc. v. SEB S.A.131 S. Ct. 458 (2010)

• Federal Circuit concluded that jury’s finding of induced infringement was justified, because the infringer “deliberately ignored the risk that SEB had a patent that covered its deep fryer”

• “[A] claim for inducement is viable even where the patentee has not produced direct evidence that the accused infringer actually knew of the patent-in-suit.”

• Supreme Court granted certiorari; will be argued on February 23, 2011

1212

THE BAYH-DOLE ACT:STANFORD V. ROCHE

1313

Stanford University v. Roche Molecular Systems178 L. Ed. 2d 368 (2010)

• Roche purchased rights in a company, including certain agreements with Stanford

• Roche claimed ownership in patent that was assigned to Stanford, directed to methods for quantifying HIV in human blood samples

• District court dismissed Roche’s ownership claims, based in part on the Bayh-Dole Act, which gives universities and non-profits control of their intellectual property from federally-funded research

• Federal Circuit affirmed

• Supreme Court granted certiorari; will be argued February 28, 2011

1414

PERSONAL JURISDICTION AND STREAM OF COMMERCE:

GOODYEAR V. BROWN

1515

Goodyear Luxembourg Tires, S.A. v. Brown131 S. Ct. 63 (2010)

• Browns sued Goodyear after fatal bus accident in France, based on failed tires

• Tires were manufactured by Goodyear Turkey, a foreign corporation

• District court denied Goodyear’s motion to dismiss for lack of personal jurisdiction, concluding that placing the tires in the stream of commerce was sufficient

• Court of Appeals of N.C. affirmed

• Supreme Court granted certiorari; argued on January 11, 2011

1616

THE FEDERAL CIRCUIT:

EN BANC DECISIONS

1717

WRITTEN DESCRIPTION:ARIAD V. LILLY

1818

Ariad Pharmaceuticals, Inc. v. Eli Lilly & Co.598 F.3d 1336 (Fed. Cir. 2010)

• Ariad sued Lilly for infringement based on Lilly’s Evista and Xigris pharmaceutical products

• Ariad’s claims were genus claims, encompassing the use of any substance to reduce the activity of the transcription factor NF-[K]B in a cell

• Federal Circuit held that written description requirement is separate and distinct from enablement requirement

• Federal Circuit also held that Ariad’s claims were invalid for lack of written description, because the specification did not adequately disclose how the claimed reduction in transcription factor is achieved

1919

PATENT MISUSE FOR TYING:

PRINCO V. ITC

2020

Princo Corp. v. ITC616 F.3d 1318 (Fed. Cir. 2010)

• Patentee tied licensing agreements for CD-Rs and CD-RWs with an agreement that its competitor would not license a potentially-competing technology

• Licensee argued in response to infringement suit that patents were unenforceable for patent misuse because of the tying arrangement and other grounds

• In licensing, the doctrine of patent misuse limits a patentee’s right to impose conditions on a licensee that exceed the scope of the patent right

• ITC concluded that the agreements did not render the patents unenforceable under the doctrine of patent misuse

2121

Princo Corp. v. ITC616 F.3d 1318 (Fed. Cir. 2010)

• Federal Circuit affirmed the ITC’s finding that the agreements did not constitute patent misuse

• The Court reasoned that a misuse allegation must relate directly to the alleged misused patent and not merely to a collateral agreement that might impact the value of an otherwise enforceable patent

• The Court also reasoned that Princo had failed to show that the agreement was per se anticompetitive, or that its overall effect was an unlawful restraint on competition

2222

EVIDENCE IN SECTION 145 ACTIONS:

HYATT V. KAPPOS

2323

Hyatt v. Kappos625 F.3d 1320 (Fed. Cir. 2010)

• On appeal of rejected patent application under Section 145, applicant submitted written declaration identifying portions of the specification describing the challenged claim limitations

• District court refused to consider the declaration and granted summary judgment to the Director

• Federal Circuit held that Section 145 “imposes no limitation on an applicant’s right to introduce new evidence before the district court, apart from the evidentiary limitations applicable to all civil actions contained in the Federal Rules…”

• Federal Circuit vacated the order granting summary judgment and remanded

2424

INEQUITABLE CONDUCT:THERASENSE V. BECTON,

DICKINSON & CO.

2525

Therasense, Inc. v. Becton, Dickinson & Co.593 F.3d 1289 (Fed. Cir. 2010)

• Federal Circuit affirmed decision that claims were invalid for obviousness or anticipation, and were unenforceable for inequitable conduct

• In April, Federal Circuit granted petition for rehearing en banc and vacated January opinion

2626

Post-Therasense: Federal Circuit Decisions

• Avid Identification Systems, Inc. v. Crystal Import Corp.– Found corporation’s founder and president was

“substantively involved in the preparation or prosecution of the application,” and, therefore, owed duty of candor to PTO

– Affirmed decision that patent unenforceable for inequitable conduct

• Optium Corp. v. Emcore Corp.– Affirmed summary judgment of no inequitable conduct,

because no evidence that alleged infringer could succeed in proving deceptive intent even if the undisclosed article was highly material

2727

Post-Therasense: Federal Circuit Decisions

• Lazare Kaplan International, Inc. v. Photoscribe Technologies, Inc.– District court found inequitable conduct for Lazare’s

failure to adequately disclose the structure of its own prior art machine, deeming the case “exceptional” and awarding attorney fees

– Federal Circuit vacated, reasoning that even if the information was highly material, there was no showing of an intent to deceive

– “At best, the failure to disclose what was believed to be cumulative information was a mistake or exercise of poor judgment that does not support an inference of intent to deceive.”

2828

INJUNCTION AND CONTEMPT:

TIVO V. ECHOSTAR

2929

Tivo Inc. v. EchoStar Corp.597 F.3d 1247 (Fed. Cir. 2010)

• District court found EchoStar liable for infringement, and issued permanent injunction for EchoStar to stop making and selling the infringing receivers, and to disable the patented functionality in existing receivers

• District court subsequently found EchoStar in contempt of the injunction, finding that its redesigned software still infringed, and imposing sanctions of about $90 million

• In March 2010, Federal Circuit affirmed the order, noting that a lack of intent alone cannot save an infringer from a finding of contempt

• In May 2010, Federal Circuit granted petition for en banc rehearing and vacated the March opinion

• Arguments heard in November; no decision has been rendered

3030

THE FEDERAL CIRCUIT:OTHER SIGNIFICANT

DECISIONS

3131

ON-SALE BAR AND EXHAUSTION:HONEYWELL

TRANSOCEAN

3232

Solvay S.A. v. Honeywell International, Inc.622 F.3d 1367 (Fed. Cir. 2010)

• Prior to Solvay’s patent date, alleged infringer Honeywell reduced the claimed process to practice by using research data from a foreign research company

• District court concluded that the claims were not infringed, based on prior inventorship by Honeywell

• Federal Circuit reversed, holding that Honeywell did not “invent” the claimed process in the U.S. as required by Section 102(g)(2)

3333

Transocean, Inc. v. Maersk Contractors, Inc.617 F.3d 1296 (Fed. Cir. 2010)

• District court granted summary judgment that claims were not infringed, concluding that an offer made in Norway by a U.S. company to another U.S. company to sell a product within the U.S. for delivery and use within the U.S. did not constitute an offer to sell within the U.S. under Section 271

• Federal Circuit vacated

• Federal Circuit concluded that a contract between two U.S. companies for delivery and performance in the U.S. was an offer to sell within the U.S. under Section 271, noting that the focus of the inquiry should not be the location of the offer

3434

FALSE MARKING:SOLO CUP

BROOKS BROTHERS

3535

Pequignot v. Solo Cup Co.608 F.3d 1356 (Fed. Cir. 2010)

• District court granted summary judgment that Solo Cup did not have the requisite intent to deceive in marking its products with expired patent numbers

• Federal Circuit affirmed

• Federal Circuit held that Section 292 includes marking with expired patent numbers, but that mere knowledge that a patent marking is false is insufficient to prove intent so long as the party can prove it did not consciously desire that the public be deceived

3636

Stauffer v. Brooks Brothers, Inc.619 F.3d 1321 (Fed. Cir. 2010)

• Stauffer brought qui tam action under Section 292 for Brooks Brothers’ alleged false marking of bow ties with expired patents

• District court dismissed for lack of standing

• Federal Circuit reversed and remanded, holding that any person has standing to sue on behalf of the government under Section 292 and a right to one-half the recovery

3737

INFRINGEMENT BASED ON INDUSTRY STANDARDS:

FUJITSU V. NETGEAR

3838

Fujitsu Limited v. Netgear Inc.620 F.3d 1321 (Fed. Cir. 2010)

• Owners of patents relating to wireless communication technologies were part of a licensing pool that purported to include patents that any manufacturer must license in order to comply with two industry standards

• Patent owners sued Netgear for infringement, arguing that Negear necessarily infringed by complying with the industry standards

• District court granted summary judgment of noninfringement, reasoning that the patent owners must show evidence of infringement for each accused product

3939

Fujitsu Limited v. Netgear Inc.620 F.3d 1321 (Fed. Cir. 2010)

• Federal Circuit stated that it is not enough to show that a product is capable of infringement, but declined to establish a rule precluding the use of industry standards in assessing infringement

• “Only in the situation where a patent covers every possible implementation of a standard will it be enough to prove infringement by showing standard compliance.”

• Federal Circuit reversed the summary judgment with regard to certain products for which infringement was shown, and affirmed with regard to the others

4040

OBVIOUSNESS:CROCSWYERSTRIMEDDAIICHI

4141

Crocs, Inc. v. ITC598 F.3d 1294 (Fed. Cir. 2010)

• ITC found that patent merely combined elements of prior art for the base and the strap of Croc’s footwear

• Federal Circuit reversed, concluding that the patented footwear included a foam strap riveted to a foam base with direct contact, which was discouraged by the prior art, and that commercial success and copying indicated non-obviousness

4242

Wyers v. Masterlock616 F.3d 1231 (Fed. Cir. 2010)

• Wyers owned patents covered hitch pin locks for securing trailers to cars and SUVs

• District court denied Masterlock’s renewed JMOL motion after jury found patent claims not obvious

• Federal Circuit reversed, finding that claims would have been obvious as a matter of law

4343

TriMed, Inc. v. Stryker Corp.608 F.3d 1333 (Fed. Cir. 2010)

• TriMed owned patent covering implantable device to set bone fractures

• District court granted summary judgment of obviousness

• Federal Circuit reversed and remanded to a different judge, because the current judge had been reversed twice after entering summary judgment in favor of the alleged infringer, in both instances simply signing the proposed statement of law and facts

4444

Daiichi Sankyo Co. v. Matrix Laboratories, Ltd.619 F.3d 1346 (Fed. Cir. 2010)

• Daiichi owned patent claiming chemical compounds and their use in treating high blood pressure, commercialized as Benicar and Azor

• In ANDA litigation, district court concluded claims were not obvious

• Federal Circuit affirmed, concluding artisan would not have been motivated to select the prior art compound as a lead compound over other prior art compounds having greater potency, and that the prior art as a whole taught away from the modification used in the compound at issue

4545

Thank you

Esther LimManaging Partner

Shanghai Representative OfficeFinnegan, Henderson, Farabow, Garrett & Dunner, LLP

Mirae Asset Tower, 28/F, Unit A-B166 Lujiazui Ring Road

Pudong, Shanghai 200120 PRC

Tel. 86.21.6194.2008esther.lim@finnegan.com