Last Month at the Federal CircuitOctober 2013

Claim Construed According to Accepted Scientific Meaning Where Specification and Prosecution History Did Not Justify AlternativeConstructionBayer CropScience AG v. Dow AgroSciences,LLCNo. 13-1002 (Fed. Cir. Sept. 3, 2013)[Appealed from D. Del., Judge Bumb]

On Rehearing, Dependent Claim That Was Not Separately Argued Fell with Independent ClaimSoverain Software LLC v. Newegg Inc.No. 11-1009 (Fed. Cir. Sept. 4, 2013)[Appealed from E.D. Tex., Judge Davis]

For a Suit Filed Pre-AIA, a Counterclaim Related to Patent Law Does Not Confer Federal Question JurisdictionWawrzynski v. H.J. Heinz Co.No. 12-1624 (Fed. Cir. Sept. 6, 2013)[Appealed from W.D. Pa., Judge Schwab]

District Court Erred in Granting SJ of Invalidity for Design Patent Based on Obviousness and FunctionalityHigh Point Design LLC v. Buyer’s Direct, Inc.No. 12-1455 (Fed. Cir. Sept. 11, 2013)[Appealed from S.D.N.Y., Judge Forrest]

Patent App[eals] includes PDFs of all patent-related Federal Circuit decisions dating back to 2001. A user can search on keywords, judges, dates of decisions, lower court from which the case was appealed, case name, case number, and whether or not a case was heard en banc. In addition, cases summarized in Last Month at the Federal Circuit newsletter also include the Finnegan case summary.

If No Generic Claim Is Finally Held Allowable, Election of a Species Creates a Restriction Under 35 U.S.C. § 121St. Jude Medical, Inc. v. Access Closure, Inc.No. 12-1452 (Fed. Cir. Sept. 11, 2013)[Appealed from W.D. Ark., Senior Judge Barnes]

Using PTO’s Standard Form for Unintentional Delayed Payment, Without Disclosing Why Unintentional Delay Occurred, Does Not Constitute Inequitable ConductNetwork Signatures, Inc. v. State Farm Mutual Automobile Insurance Co.No. 12-1492 (Fed. Cir. Sept. 24, 2013)[Appealed from C.D. Cal., Judge Selna]

Board Exceeded Its “Limited Role” in Reviewing Examiner’s Findings DuringReexaminationRambus Inc. v. ReaNo. 12-1634 (Fed. Cir. Sept. 24, 2013)[Appealed from Board]

Objective Evidence of Nonobviousness Must Be Commensurate in Scope with ClaimsMeadWestVaco Corp. v. Rexam Beauty & Closures, Inc.Nos. 12-1518, -1527 (Fed. Cir. Sept. 26, 2013)[Appealed from E.D. Va., Judge Lee]

Pledge Not to Infringe Cannot Override Conclusion of Infringement Based on Seeking FDA Approval to Market Generic Compound Within Scope of Valid PatentSunovion Pharmaceuticals, Inc. v. Teva Pharmaceuticals USA, Inc.No. 13-1335 (Fed. Cir. Sept. 26, 2013)[Appealed from D.N.J., Judge Wigenton]

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DISCLAIMER: The case summaries are intended to convey general information only and should not be construed as a legal opinion or as legal advice. The firm disclaims liability for any errors or omissions and readers should not take any action that relies upon the information contained in this newsletter. You should consult your own lawyer concerning your own situation and any specific legal questions. This promotional newsletter does not establish any form of attorney-client relationship with our firm or with any of our attorneys.

ContactsIf you have any questions or need additional information, please contact:Esther H. Lim, Editor-in-ChiefJoyce Craig, Assistant EditorElizabeth D. Ferrill, Assistant EditorShana K. Cyr, Assistant EditorTrenton J. Roche, Assistant Editor

Washington, DC ▪ Atlanta, GA ▪ Boston, MA ▪ Palo Alto, CA ▪ Reston, VA ▪ Brussels ▪ Shanghai ▪ Taipei ▪ Tokyo

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Copyright © 2013 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP | All rights reserved

AbbreviationsALJ Administrative Law JudgeANDA Abbreviated New Drug ApplicationAPA Administrative Procedures ActAPJ Administrative Patent JudgeBoard Board of Patent Appeals and InterferencesCommissioner Commissioner of Patents and TrademarksCIP Continuation-in-PartDJ Declaratory JudgmentDOE Doctrine of EquivalentsFDA Food and Drug AdministrationIDS Information Disclosure StatementITC International Trade CommissionJMOL Judgment as a Matter of LawMPEP Manual of Patent Examining ProcedureNDA New Drug ApplicationPCT Patent Cooperation TreatyPTO United States Patent and Trademark OfficeSJ Summary JudgmentTTAB Trademark Trial and Appeal Board

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Last Month at the Federal Circuit

October 2013

Claim Construed According to Accepted Scientific Meaning Where Specification and Prosecution History Did Not Justify Alternative ConstructionMarcus D. Kretzschmar

In Bayer CropScience AG v. Dow AgroSciences, LLC, No. 13-1002 (Fed. Cir. Sept. 3, 2013), the FederalCircuit affirmed the district court’s SJ of noninfringement because it did not accept the patent owner’s proposed claim construction.

U.S. Patent No. 6,153,401 (“the ’401 patent”), owned by Bayer CropScience AG (“Bayer”), relates to genetically modifying plants to render them resistant to the commonly used herbicide, 2,4-dichlorophenoxyacetic acid (“2,4-D”). The method involves inserting into plant cells a gene encoding an enzyme that can break down the 2,4-D herbicide into harmless products by converting it to2,4-dichlorophenol (“2,4-DCP”). The ’401 patent discloses the first identified gene encoding such an enzyme and describes a “growth test” for isolating it.

The enzymatic reaction requires the presence of an oxygen molecule (O2), and the inventors understood

at the time of filing that one of the oxygen atoms combined with 2,4-D to form 2,4-DCP and glyoxylate by “bringing about the cleavage of the side chain of 2,4-D.” Slip op. at 4 (citation omitted). The inventors did not know what happened to the second oxygen atom, but relied on an unverified belief that it ended up in water (H2O) and thus characterized the enzyme as a monooxygenase. While the application was

pending, Bayer learned that the second oxygen atom did not actually end up in water such that the enzyme was not correctly characterized as a monooxygenase. Bayer did not change the language of itspending claim 1, which recited “[a] recombinant gene, comprising a DNA sequence encoding a polypeptide having the biological activity of 2,4-D monooxygenase . . . .” Id. at 5-6 (citation omitted).

Bayer sued Dow AgroSciences, LLC (“Dow”) for infringement based on Dow’s genetically modified seeds that are resistant to 2,4-D and other herbicides. Dow’s accused seeds use resistance genes that are different from the gene identified in the ’401 patent, but which also code for dioxygenases that catalyze the conversion of 2,4-D to 2,4-DCP. Bayer asserted that claim 1 encompasses any enzyme with “the biological activity of 2,4-D monooxygenase,” meaning any enzyme that triggers cleaving of the side chain of 2,4-D to produce 2,4-DCP. After a Markman hearing and cross-motions for SJ, the district court rejected Bayer’s proposed claim construction and granted SJ of noninfringement for Dow. Bayerappealed.

On appeal, the Federal Circuit noted that the case turned on whether Bayer’s proposed construction of the term “the biological activity of 2,4-monooxygenase” as “bringing about the cleavage of the side chain of 2,4-D” was correct. The Court disagreed with Bayer’s proposed construction for two reasons:

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Judges: Prost, Bryson, Taranto (author)[Appealed from D. Del., Judge Bumb]

(1) familiar aspects of textual analysis pointed strongly the other way; and (2) it would read independent claim 1 so broadly as to raise serious doubts about validity.

“In short, as the district court explained, the claim language has a strong accepted scientific meaning. Bayer’s alternative construction strips themonooxygenase half of the claim phrase of its accepted descriptive meaning and then asserts a specification ‘definition’ of the biological-activity half. We do not find enough in the specification or prosecution history to justify those steps.” Slip op. at 12.

First, the Federal Circuit concluded that Bayer’s “efforts fight a facially straight-forward textual analysis.”Id. at 8. The Court noted that the meaning of “monooxygenase” as an enzyme catalyzing a reaction in which one oxygen atom is incorporated into water and the other is incorporated into something other than water was undisputed. The Court concluded that putting “2,4-D” in front of “monooxygenase” appeared to be a standard way of conveying that the enzyme acts on 2,4-D, and that “the biological activity of” was naturally understood to refer to the activity that makes the identified enzyme a monooxygenase that acts on 2,4-D, namely, the attachment of one oxygen atom to the 2,4-D molecule to trigger cleaving with theother oxygen atom going to water. The Court found no indication that the ’401 patent used the term “monooxygenase” differently from its accepted scientific meaning, which would be required for Bayer’s position. The Court stated, “Familiar claim-construction policies regarding public notice and patentee drafting duties make it appropriate to demand such clarity here: Bayer chose the language based on an unverified belief that it accurately described its enzyme, learned that the belief was false while the application was pending, had seven years before its patent issued to alter the language, but never did.”Id. at 9. The Court also disagreed with Bayer’s position that the specification defined “biological activity”as “bringing about the cleavage of the side chain of 2,4-D.” Id. at 11. The Court concluded that “the claim language has a strong accepted scientific meaning,” and that “Bayer’s alternative construction strips the monooxygenase half of the claim phrase of its accepted descriptive meaning and then asserts a specification ‘definition’ of the biological-activity half.” Id. at 12. The Court held that these steps were not justified by the specification or prosecution history.

Second, the Federal Circuit concluded that Bayer’s proposed construction would call into serious doubt the claim’s validity under 35 U.S.C. § 112(a). According to the Court, Bayer’s proposed construction went far beyond the identified enzyme and monooxygenases “to capture the broad functionally defined genus of enzymes that cause cleaving of the 2,4-D side chain.” Id. The Court noted that the ’401 patent disclosed a single embodiment, and that “neither the patent nor the knowledge in the art showed that what Bayer offered in place of a description of the shared structure—the growth test—correlated closely with an enzyme’s structure.” Id. at 14. According to the Court, the ’401 patent provided at best a “roadmap” of how to complete the unfinished invention, and even with this “roadmap,” not all members of the genus could be reliably discovered. The Court stated that “the significant invalidity troubles that accompany Bayer’s construction substantiate our rejection of it.” Id.

The Court noted that neither party presented a reason to go beyond rejecting Bayer’s proposed claim construction, stating, “All we need and do say is that, because we do not accept the only claim construction under which Bayer has alleged infringement, we affirm the summary judgment ofnon-infringement.” Id. at 16.

DISCLAIMER: The case summaries are intended to convey general information only and should not be construed as a legal

opinion or as legal advice. The firm disclaims liability for any errors or omissions and readers should not take any action that

relies upon the information contained in this newsletter. You should consult your own lawyer concerning your own situation

and any specific legal questions. This promotional newsletter does not establish any form of attorney-client relationship with

our firm or with any of our attorneys.

If you have any questions or need additional information, please contact:Esther H. Lim, Editor-in-ChiefJoyce Craig, Assistant EditorElizabeth D. Ferrill, Assistant EditorShana K. Cyr, Assistant EditorTrenton J. Roche, Assistant Editor

Washington, DC ▪ Atlanta, GA ▪ Boston, MA ▪ Palo Alto, CA ▪ Reston, VA ▪ Brussels ▪ Shanghai ▪ Taipei ▪ Tokyo

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Copyright © 2013 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP | All rights reserved

Last Month at the Federal Circuit

October 2013

On Rehearing, Dependent Claim That Was Not Separately Argued Fell with Independent ClaimDaniel Zeilberger

In Soverain Software LLC v. Newegg Inc., No. 11-1009 (Fed. Cir. Sept. 4, 2013), the Federal Circuitgranted rehearing and amended the judgment in Soverain Software LLC v. Newegg, Inc., 705 F.3d 1333 (Fed. Cir. 2013), in which independent claim 34 of U.S. Patent No. 5,715,314 (“the ’314 patent”) was held to be invalid for obviousness, and finding that dependent claim 35 of the ’314 patent is also invalid for obviousness. Independent claim 34 of the ’314 patent, upon which claim 35 depends, is generally directed to a network-based sales system that includes a buyer computer, a shopping cart computer, and a shopping cart database. Claim 34 provides, among other things, that the shopping cart computer is programmed to cause a payment message associated with the shopping cart to be created and the buyer computer is programmed to cause the payment message to be activated. Dependent claim 35 provides that the shopping cart computer is programmed to cause the payment message to be created before the buyer computer causes the payment message to be activated.

“When a dependent claim and the independent claim it incorporates are not separately argued, precedent guides that absent some effort at distinction, the claims rise or fall together.” Slip op. at 6.

Soverain Software LLC (“Soverain”) sued Newegg Inc. (“Newegg”) for alleged infringement of severalpatents, including the ’314 patent. The district court found dependent claim 35 of the ’314 patent to be valid and infringed, but did not mention any limitation of claim 35 in its discussion of either validity orinfringement. On appeal, the Federal Circuit reversed, holding that independent claim 34 is obvious, but did not explicitly address dependent claim 35. The Court granted rehearing to resolve any confusion in its treatment of dependent claim 35. On rehearing, the Federal Circuit confirmed that claim 34 is representative of the “shopping cart” claims, including claim 35, and concluded that claim 35 is invalid for obviousness. The Court noted that “[t]he district court [had] directed its substantive analysis to limitations in claim 34” and that “[o]n the appeal, the parties again focused their presentations and argument solely on claim 34.” Slip op. at 4-5. The Court found that “[w]hen a dependent claim and the independent claim it incorporates are not separately argued, precedent guides that absent some effort at distinction, the claims rise or fall together.” Id. at 6. The Court concluded that, since the supplemental briefing for the rehearing reinforced the absence of dispute that the features of dependent claim 35 were in the prior art, independent claim 34 is representative of dependent claim 35, and claim 35 is likewise invalid.

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Judges: Newman, Prost, Reyna (per curiam)[Appealed from E.D. Tex., Judge Davis]

DISCLAIMER: The case summaries are intended to convey general information only and should not be construed as a legal

opinion or as legal advice. The firm disclaims liability for any errors or omissions and readers should not take any action that

relies upon the information contained in this newsletter. You should consult your own lawyer concerning your own situation

and any specific legal questions. This promotional newsletter does not establish any form of attorney-client relationship with

our firm or with any of our attorneys.

If you have any questions or need additional information, please contact:Esther H. Lim, Editor-in-ChiefJoyce Craig, Assistant EditorElizabeth D. Ferrill, Assistant EditorShana K. Cyr, Assistant EditorTrenton J. Roche, Assistant Editor

Washington, DC ▪ Atlanta, GA ▪ Boston, MA ▪ Palo Alto, CA ▪ Reston, VA ▪ Brussels ▪ Shanghai ▪ Taipei ▪ Tokyo

www.finnegan.com

Copyright © 2013 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP | All rights reserved

Last Month at the Federal Circuit

October 2013

For a Suit Filed Pre-AIA, a Counterclaim Related to Patent Law Does Not Confer Federal Question JurisdictionAmanda J. Dittmar

In Wawrzynski v. H.J. Heinz Co., No. 12-1624 (Fed. Cir. Sept. 6, 2013), the Federal Circuit held that,under the law that applied when the suit was filed, it lacked subject matter jurisdiction over the merits of the appeal and transferred the appeal to the U.S. Court of Appeals for the Third Circuit.

In 1997, David Wawrzynski patented a method for dipping and wiping a food article in a speciallyconfigured condiment package, U.S. Patent No. 5,676,990 (“the ’990 patent”). In a March 2008 letter to H.J. Heinz Company (“Heinz”), Wawrzynski sent promotional materials that depicted and described a condiment container similar to the condiment container depicted in the ’990 patent. The materials also contained information not disclosed in the ’990 patent, including the “Little Dipper” name, a slogan, a discussion of a “pull tab” design, and various graphical representations of the Little Dipper with the Heinz logo. In a meeting with Heinz, Wawrzynski contends that he shared the idea of creating a “dual function”product, one that permitted a consumer to either dip a food article into the condiment or separately squeeze out the condiment. Heinz responded to Wawrzynski that it was not interested in his product ideas. Months later, Heinz released its new “Dip & Squeeze®” packet that allowed a user to either pull a tab to reveal a well of sauce for dipping, or rip off an end of the packet to dispense sauce by squeezing.

On October 5, 2010, Wawrzynski filed a lawsuit against Heinz in Michigan state court asserting claims relating to the Dip & Squeeze®. Heinz countered by removing the action to the U.S. District Court for theEastern District of Michigan on the basis of diversity jurisdiction. Wawrzynski then filed an amended complaint, including two counts: (1) breach of an implied contract, and (2) unjust enrichment based onHeinz’s alleged use of Wawrzynski’s ideas for condiment packaging, and for use in advertising and promoting the Dip & Squeeze®. The amended complaint referenced the ’990 patent.

Heinz filed a counterclaim alleging that Heinz did not infringe the ’990 patent and that the ’990 patent was invalid. Wawrzynski filed a motion to dismiss Heinz’s counterclaim on the ground that the complaint was asserting state law claims, not patent infringement. Concluding that the case implicated the ’990 patent, the district court denied the motion to dismiss and transferred the case to the Western District ofPennsylvania’s Patent Pilot Program.

On March 16, 2012, Wawrzynski answered Heinz’s counterclaim, stating that he was not suing Heinz forinfringement of the ’990 patent. He followed this with a covenant not to sue Heinz on the basis of the ’990 patent. Wawrzynski filed a second motion to dismiss Heinz’s counterclaim, arguing that he had admitted in his answer that he was not suing Heinz for patent infringement, and had provided Heinz with

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Judges: Newman, Plager (author), Prost[Appealed from W.D. Pa., Judge Schwab]

a covenant not to sue. The district court denied the motion.

Heinz filed a motion for SJ, arguing that Wawrzynski’s other claims were preempted by federal patent law. The district court granted the motion, and Heinz moved for SJ on its counterclaim of noninfringement. Finding that it had jurisdiction to decide the matter, the district court granted Heinz’s motion for SJ of noninfringement. Wawrzynski appealed both of the district court’s rulings.

The Federal Circuit asked the parties to address (1) whether the pre- or post-America Invents Act (“AIA”) version of 28 U.S.C. § 1295(a)(1) governed the case, and (2) whether the Court had jurisdiction under the governing version of § 1295(a)(1). Both parties argued that the Federal Circuit had jurisdiction but for different reasons. The Court addressed each party’s arguments in turn, ultimately deciding that it did not have jurisdiction.

“Because federal law does not create Mr. Wawrzynski’s cause of action, we lack subject matter jurisdiction over his appeal under the pre-AIA version of § 1295.” Slip op. at 13.

Wawrzynski argued that the post-AIA version of § 1295 governed the case, because even though the suit was filed before the effective date of the AIA, Heinz filed the counterclaim asserting noninfringement of the ’990 patent after the effective date. He argued that, based on the Sixth Circuit’s decision inStatic Control, the Federal Circuit has jurisdiction in certain “evolving circumstances,” and that Heinz’s counterclaim presents such circumstances. Slip op. at 7-8 (citing Static Control Components, Inc. v. Lexmark Int’l, Inc., 697 F.3d 387, 398-99 (6th Cir. 2012), cert. granted, No. 12-873, 2013 WL 182751 (U.S. June 3, 2013)). The Court disagreed, holding that the “evolving circumstances” standard only applies when the court deems a claim to be part of the pleadings because the parties have consented, expressly or implicitly, to litigate that claim. The Court held that Wawrzynski’s two motions to dismiss thecounterclaim for lack of jurisdiction, combined with his admission in his pleadings that Heinz did not infringe and his covenant not to sue, clearly indicated that he did not consent to litigating a claim for patent infringement.

The Federal Circuit also held that even if both parties had consented to litigate patent infringement, the AIA version of § 1295 applies to lawsuits “commenced” on or after the effective date, and that a lawsuit “commences” upon the filing of the complaint. The Court therefore held that the post-AIA version of § 1295 only governs a case if the complaint was filed after the effective date, September 16, 2011.

The Federal Circuit also dismissed Heinz’s reasoning for why it believed the Court had jurisdiction in thiscase. Heinz argued that the Court had jurisdiction under the pre-AIA version of § 1295, because the original complaint asserted a claim of patent infringement. The Court focused on the “well-pleaded complaint” rule, stating that “federal question jurisdiction extends over ‘only those cases in which a well-pleaded complaint establishes either that federal law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law.’” Id. at 10 (quoting Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 808 (1988)). The Court held that the complaint in this case was not well pleaded for patent infringement and that to construe it to the contrary “would turn the well-pleaded complaint rule on its head.” Id. at 12-13.

In determining that the complaint was not well pleaded, the Court first noted that it did not contain the language of a typical patent allegation, i.e., the complaint did not contain even a single variation of the word “infringe.” Further, the complaint only articulated two counts (state law allegations of “Breach of Implied Contract” and “Unjust Enrichment”), neither of which was related to patent law. As evidence, the complaint alleged that Wawrzynski provided Heinz with ideas not found in the ’990 patent, including the“Little Dipper” name, a slogan, a discussion of a “pull tab” design, and representations of the Little Dipper with the Heinz logo. Further, the Court held that the procedural context in which Wawrzynski filed his

original complaint indicated he intended to eschew federal law and invoke state law, because if he wanted to assert patent infringement, Wawrzynski would have filed in federal court. The Court thus determined that the complaint was not well pleaded for patent infringement. “Because federal law does not create Mr. Wawrzynski’s cause of action, we lack subject matter jurisdiction over his appeal under the pre-AIA version of § 1295.” Id. at 13.

The Court found that the case was governed by the pre-AIA version of § 1295, because the date a complaint is filed, not the date a counterclaim is filed, determines which version applies. Under the pre-AIA version of § 1295, the complaint did not contain allegations of patent infringement. As a result, the Federal Circuit lacked jurisdiction and ordered a transfer to the Third Circuit.

DISCLAIMER: The case summaries are intended to convey general information only and should not be construed as a legal

opinion or as legal advice. The firm disclaims liability for any errors or omissions and readers should not take any action that

relies upon the information contained in this newsletter. You should consult your own lawyer concerning your own situation

and any specific legal questions. This promotional newsletter does not establish any form of attorney-client relationship with

our firm or with any of our attorneys.

If you have any questions or need additional information, please contact:Esther H. Lim, Editor-in-ChiefJoyce Craig, Assistant EditorElizabeth D. Ferrill, Assistant EditorShana K. Cyr, Assistant EditorTrenton J. Roche, Assistant Editor

Washington, DC ▪ Atlanta, GA ▪ Boston, MA ▪ Palo Alto, CA ▪ Reston, VA ▪ Brussels ▪ Shanghai ▪ Taipei ▪ Tokyo

www.finnegan.com

Copyright © 2013 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP | All rights reserved

Last Month at the Federal Circuit

October 2013

District Court Erred in Granting SJ of Invalidity for Design Patent Based on Obviousness and FunctionalityJeremy A. Briggs

In High Point Design LLC v. Buyer’s Direct, Inc., No. 12-1455 (Fed. Cir. Sept. 11, 2013), the FederalCircuit reversed the grant of SJ of patent invalidity based on obviousness and functionality, vacated the dismissal of trade dress claims, and remanded for further proceedings.

Buyer’s Direct, Inc. (“BDI”) is the owner of U.S. Design Patent No. D598,183 (“the ’183 patent”) and manufacturer of SNOOZIES® slippers, and High Point Design LLC (“High Point”) manufactures and distributes FUZZY BABBA® slippers. After BDI sent a cease and desist letter to High Point asserting infringement of the ’183 patent, High Point filed a DJ action alleging (1) that the manufacturing and sale of the accused slippers did not infringe the ’183 patent, and (2) that the ’183 patent was invalid and/orunenforceable. BDI counterclaimed for infringement of the ’183 patent and the trade dress found in BDI’s SNOOZIES® slippers. High Point moved for SJ of invalidity and noninfringement of the ’183 patent and judgment on the pleadings with respect to BDI’s trade dress claims. With its opposition to the motion, BDI included the declaration of an expert who opined that the ’183 patent was not invalid because “tests for anticipation, functionality and obviousness have not been met.” Slip op. at 6 (citation omitted).

The district court granted High Point’s motion, finding that the ’183 patent was obvious in light of the prior art, including two slipper models made by Woolrich (“Woolrich Prior Art”), and was primarily functional rather than ornamental. The district court rejected BDI’s request to amend its pleadings and dismissed BDI’s trade dress claims with prejudice, finding the trade dress claims inadequate as a matter of law for failure to sufficiently identify the trade dress at issue. BDI appealed.

On appeal, BDI challenged both the grant of SJ of invalidity and the dismissal with prejudice of its trade dress claims. Regarding obviousness, BDI contended that the district court erred by using the Woolrich Prior Art designs as primary references, because their design characteristics are not “basically the same as the claimed design,” and by not identifying a motivation to modify the Woolrich Prior Art to achieve the “same overall visual appearance as the claimed design.” Id. at 12 (quoting Durling v. Spectrum FurnitureCo., 101 F.3d 100, 103 (Fed. Cir. 1996)).

“An inventor can, upon meeting all statutory requirements, obtain a design patent for ‘any new, original and ornamental design for an article of manufacture . . . .’ 35 U.S.C. § 171 (emphasis added). Based on this requirement, a design patent can be declared invalid if the claimed design is

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Judges: O’Malley, Schall (author), Wallach[Appealed from S.D.N.Y., Judge Forrest]

‘primarily functional’ rather than ‘primarily ornamental,’ i.e., if ‘the claimed design is dictated by the utilitarian purpose of the article.’” Slip op. at 18-19 (quoting L.A. Gear, Inc. v. Thom McAn Shoe Co., 988 F.2d 1117, 1123 (Fed. Cir. 1993) (internal quotation marks omitted)).

BDI also asserted that the district court failed to perform a proper obviousness analysis, because it(1) applied an “ordinary observer” standard rather than an “ordinary designer” standard; (2) failed to properly communicate its reasoning in either step of the obviousness analysis under Durling; and (3) did not address secondary considerations, including copying and commercial sales. First, the Court held that the district court erred in applying the ordinary observer standard rather than the ordinary designer standard, and in categorically disregarding BDI’s expert declaration. The Court commented, “Althoughobviousness is assessed from the vantage point of an ordinary designer in the art, ‘an expert’s opinion on the legal conclusion of obviousness is neither necessary nor controlling.’ That said, an expert’s opinion may be relevant to the factual aspects of the analysis leading to that legal conclusion.” Id. at 15-16 (quoting Avia Grp. Int’l, Inc. v. L.A. Gear Cal., Inc., 853 F.2d 1557, 1564 (Fed. Cir. 1988), abrogated on other grounds by Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665 (Fed. Cir. 2008) (en banc)).

The Court further held that the district court erred in its application of the two-step analysis set forth in Durling. Regarding the first part of the first step, the Court held that the district court erred by failing to translate the design of the ’183 patent into a verbal description. The Court stated, “The closest to the necessary description was the [district] court’s comment characterizing the design in the ’183 patent as ‘slippers with an opening for a foot that can contain a fuzzy (fleece) lining and have a smooth outer surface.’” Id. at 16 (citation omitted). The Court reasoned that this comment “represent[ed] ‘too high alevel of abstraction’ by failing to focus ‘on the distinctive visual appearances of the reference and the claimed design.’” Id. (quoting Apple, Inc. v. Samsung Elecs. Co., 678 F.3d 1314, 1331-32 (Fed. Cir.2012)).

Regarding the second part of the first step, the Court held that the district court erred by failing to provide its reasoning, stating that absent such reasoning, it could discern how the district court concluded that the Woolrich Prior Art was “basically the same as the claimed design” such that either design could act as the primary reference. Id. at 17. The Court further held that there appeared to be genuine issues of material fact as to whether the Woolrich Prior Art designs were proper primary references. The Court noted that the district court did not address secondary considerations, and instructed that they should be addressed on remand. The Court reversed the grant of SJ of obviousness and remanded the case to the district court.

Regarding functionality, BDI argued that the district court erred by finding the claimed design invalid merely because the design contained elements that perform functions. The Court noted that indetermining validity instead of assessing whether the claimed design was “primarily functional” or “primarily ornamental,” the district court looked to whether the design’s “primary features” can perform functions. Id. at 20. The Court held that the district court applied the incorrect standard and that a reasonable jury could, under the correct standard, find the ’183 patent not invalid based on functionality. The Court thus reversed the district court’s ruling that the ’183 patent is invalid by reason offunctionality. The Court reasoned, “[T]he fact that the article of manufacture serves a function is a prerequisite of design patentability, not a defeat thereof. The function of the article itself must not be confused with ‘functionality’ of the design of the article.” Id. at 21 (alteration in original) (quoting Hupp v. Siroflex of Am., Inc., 122 F.3d 1456, 1460 (Fed. Cir. 1997)). Because the district court applied theincorrect standard and because a reasonable jury applying the correct standard could not find the ’183 patent invalid based on functionality, the Federal Circuit reversed the district court’s ruling.

With respect to the trade dress claims, BDI asserted that the district court improperly dismissed its tradedress claims because substantial discovery remained, and the amendments were neither futile nor prejudicial, and would not have delayed the procedural schedule. The Court noted that the parties

focused on the standards they believed should apply to BDI’s request to amend its pleadings, and agreed with High Point that the appropriate standard was the Rule 16(b) good cause requirement. The Court vacated and remanded for the district court to determine whether that standard could be satisfied given the “now-ongoing nature of this litigation.” Id. at 24.

DISCLAIMER: The case summaries are intended to convey general information only and should not be construed as a legal

opinion or as legal advice. The firm disclaims liability for any errors or omissions and readers should not take any action that

relies upon the information contained in this newsletter. You should consult your own lawyer concerning your own situation

and any specific legal questions. This promotional newsletter does not establish any form of attorney-client relationship with

our firm or with any of our attorneys.

If you have any questions or need additional information, please contact:Esther H. Lim, Editor-in-ChiefJoyce Craig, Assistant EditorElizabeth D. Ferrill, Assistant EditorShana K. Cyr, Assistant EditorTrenton J. Roche, Assistant Editor

Washington, DC ▪ Atlanta, GA ▪ Boston, MA ▪ Palo Alto, CA ▪ Reston, VA ▪ Brussels ▪ Shanghai ▪ Taipei ▪ Tokyo

www.finnegan.com

Copyright © 2013 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP | All rights reserved

Last Month at the Federal Circuit

October 2013

If No Generic Claim Is Finally Held Allowable, Election of a Species Creates a Restriction Under 35 U.S.C. § 121David R. Lefebvre

In St. Jude Medical, Inc. v. Access Closure, Inc., No. 12-1452 (Fed. Cir. Sept. 11, 2013), the FederalCircuit reversed the district court’s safe harbor ruling regarding U.S. Patent No. 7,008,439 (“the Janzen patent”), determined that the district court’s rulings on claim constructions in the Janzen patent were moot, and affirmed the district court’s ruling that U.S. Patent Nos. 5,275,616 and 5,716,375 (collectively “the Fowler patents”) are nonobvious and not shown to be invalid.

St. Jude Medical, Inc. and St. Jude Medical Puerto Rico, LLC (collectively “St. Jude”) own the Janzen patent and the Fowler patents, which relate to methods and devices for sealing a vascular puncture. During prosecution of the Janzen patent’s grandparent application, the examiner required restriction of the application under 35 U.S.C. § 121 to Group I (device) or Group II (method) and an election of Species A, B, or C. The applicant elected Group I, Species B. Subsequently, the applicant filed U.S. Patent Application No. 08/318,380 (“the parent application”) as a divisional of the grandparent application. Before the parent application issued, the applicant filed U.S. Patent Application No. 08/399,535 (“the Janzen application”) as a continuation of the parent application. The Janzen patent ultimately issued with both device and method claims. The applicant also filed another continuation based on the parent application, which issued as U.S. Patent No. 5,725,498 (“the sibling patent”).

St. Jude sued Access Closure, Inc. (“ACI”), alleging that ACI infringed several patents, including the Janzen patent and the Fowler patents. The jury found that ACI had infringed the Janzen patent, but that the Janzen patent was invalid for double patenting in light of the sibling patent. Subsequently, the district court determined that the safe harbor provision of 35 U.S.C. § 121 prevented the claims of the Janzen patent from being invalidated, and overturned the jury’s finding of invalidity. The jury also found that ACI infringed the Fowler patents, and that those claims were valid. After the verdict, ACI filed a renewed JMOL motion on various claims in the Fowler patents, but the district court denied the motion. ACI appealed three of the district court’s rulings: (1) that the safe harbor provision of § 121 protects the Janzen patent from invalidity for double patenting; (2) the construction of key terms in the Janzen patent; and (3) that ACI was not entitled to JMOL that the Fowler patents are invalid for obviousness.

“Since no generic claim was applied for, and no such claim was finally held allowable, that is what occurred: the election of species in the grandparent created a restriction.” Slip op. at 15.

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Judges: Lourie (concurring), Plager (author), Wallach[Appealed from W.D. Ark., Senior Judge Barnes]

On appeal, the Federal Circuit first reversed the district court’s ruling that the safe harbor provision of § 121 applied to the Janzen patent. The Court explained that the safe harbor provision of 35 U.S.C. § 121 provides that a patent issuing on an application to which a restriction requirement was made, or an application filed as a result of such requirement, shall not be used as a reference in either the PTO or the courts “against a divisional application or against the original application or any patent issued on either of them if the divisional is filed before the issuance of the patent on the other application.” Slip op. at 11 (quoting 35 U.S.C. § 121). The Court noted that the safe harbor provision arose from difficulties created by restriction requirements imposed by the PTO during examination, followed by double patenting challenges in the courts. The Court explained the “judicially-created consonance concept,” which derives from the safe harbor’s “as a result of” requirement and specifies that the “line of demarcation between the ‘independent and distinct inventions’ that prompted the restriction requirement be maintained.” Id. at 11-12 (quoting Gerber Garment Tech., Inc. v. Lectra Sys., Inc., 916 F.2d 683, 688 (Fed. Cir. 1990)). The Court explained that “[c]onsonance in a case like this requires that the challenged patent, the reference patent, and the patent in which the restriction requirement was imposed (therestricted patent) do no claim any of the same inventions identified by the examiner.” Id. at 12.

The Court first considered the grandparent application (the restricted patent). According to ACI, duringprosecution of the grandparent application, the examiner defined two inventions: the device of Group I and the method of Group II. ACI agreed that the method/device restriction in the grandparent application affected the line of demarcation, but argued that the election of species did not affect the line because an election of species is inherently different from a restriction requirement. According to St. Jude, the restriction imposed was a multilevel restriction, which demarcated six different inventions: Group I, Species A; Group I, Species B; Group I, Species C; Group II, Species A; Group II, Species B; and Group II, Species C. St. Jude asserted that the claims of the Janzen patent maintained consonance since the Janzen patent included claims to Group I, Species C and Group II, Species C, which did not overlap with the inventions, Group I, Species B, pursued in the grandparent application.

The Federal Circuit found that ACI’s argument overlooked a critical point—that the grandparent application lacked a generic claim and that the applicant was required under § 121 to elect a singledisclosed species to which the claims would be restricted if no generic claim was finally held allowable. The Court concluded that, as no generic claim was applied for or finally held allowable, the election of the species in the grandparent created a restriction. Thus, the Court found that “there were two restriction requirements imposed on the grandparent application: the original device/method restriction, and the second restriction that resulted from the election of species.” Id. at 15.

With the line of demarcation settled, the Court next determined whether that line was honored, i.e., whether any of the same restricted inventions were claimed in the challenged patent (the Janzen patent), the reference patent (the sibling patent), or the restricted patent (the grandparent application). The Courtfound that the line of demarcation was maintained with respect to the grandparent application and the Janzen patent, but not with respect to the sibling patent. The Court explained that the sibling patent “pursued a claim generic to all of the Species in Group II, and therefore overlapped Group II, Species C found in the Janzen patent.” Id. at 16-17. Consequently, the Court concluded that “the Janzen patent and the sibling patent did not maintain consonance, and therefore the safe harbor provision cannot apply.” Id. at 17. Because the jury found that claims 7-9 of the Janzen patent were not patently distinct from the claims of the sibling patent, and the safe harbor provision could not apply, the Federal Circuit held claims 7-9 of the Janzen patent invalid for double patenting.

Because the Court held the claims invalid for double patenting, it concluded that the claim construction issues on appeal were moot. The Court also saw no error in the district court’s legal conclusion ofnonobviousness. Therefore, the Court affirmed the district court’s denial of ACI’s renewed motion for JMOL.

Judge Lourie concurred, stating that “this case is resolved by the failure of the granted Janzen and

’498 (sibling) patents to maintain consonance with the original restriction requirement.” Lourie Concurrence at 1. Judge Lourie further stated that “[t]he restriction requirement required dividing claims to devices from claims to methods, and the Janzen patent contains both device and method claims. It is the opposite of consonant.” Id. at 2. Judge Lourie opined that “the district court and the majority err ineven considering the effect of the requirement for election of species in this case.” Id. at 3.

DISCLAIMER: The case summaries are intended to convey general information only and should not be construed as a legal

opinion or as legal advice. The firm disclaims liability for any errors or omissions and readers should not take any action that

relies upon the information contained in this newsletter. You should consult your own lawyer concerning your own situation

and any specific legal questions. This promotional newsletter does not establish any form of attorney-client relationship with

our firm or with any of our attorneys.

If you have any questions or need additional information, please contact:Esther H. Lim, Editor-in-ChiefJoyce Craig, Assistant EditorElizabeth D. Ferrill, Assistant EditorShana K. Cyr, Assistant EditorTrenton J. Roche, Assistant Editor

Washington, DC ▪ Atlanta, GA ▪ Boston, MA ▪ Palo Alto, CA ▪ Reston, VA ▪ Brussels ▪ Shanghai ▪ Taipei ▪ Tokyo

www.finnegan.com

Copyright © 2013 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP | All rights reserved

Last Month at the Federal Circuit

October 2013

Using PTO’s Standard Form for Unintentional Delayed Payment, Without Disclosing Why Unintentional Delay Occurred, Does Not Constitute Inequitable ConductSydney R. Kestle*

In Network Signatures, Inc. v. State Farm Mutual Automobile Insurance Co., No. 12-1492 (Fed. Cir.Sept. 24, 2013), the Federal Circuit held that using the PTO’s standard form for delayed payment, without further disclosing why the unintentional delay occurred, does not constitute material misrepresentation with intent to deceive. Accordingly, the Court reversed the district court’s grant of SJ of inequitable conduct and remanded for further consideration.

The Naval Research Laboratory (“NRL”) developed U.S. Patent No. 5,511,122 (“the ’122 patent”) and allowed it to lapse for nonpayment of the maintenance fee due to a perceived absence of any identified commercial interest. Two weeks after the lapse, Network Signatures, Inc. (“Network Signatures”) contacted the NRL and requested a license to the ’122 patent. The NRL immediately submitted thePTO’s standard form to petition for unintentional delayed payment and revival. The PTO granted the petition, and the NRL issued the license.

Several years later, Network Signatures sued State Farm Mutual Automobile Insurance Company (“State Farm”) for infringement of the ’122 patent. State Farm asserted that the NRL engaged in inequitable conduct by falsely representing to the PTO that its nonpayment was unintentional. Consequently, State Farm argued that the ’122 patent was unenforceable. The district court agreed and granted State Farm’s motion for SJ of inequitable conduct.

“[I]t is almost surely preferable for a reviewing court not to involve itself in the minutiae of Patent Office proceedings and to second-guess the Patent Office on procedural issues at every turn.” Slip op. at 8 (quoting Laerdal Med. Corp. v. Ambui, Inc., 877 F. Supp. 255, 259 (D. Md. 1995)).

On appeal, the Federal Circuit reversed. In reviewing the district court’s decision, the Court evaluated the statute and regulation authorizing the late payment of maintenance fees. Specifically, the Court noted that the statute had been amended to provide additional flexibility for accepting late payments. Because “[m]any patentees ha[d] been deprived of their patent rights for failure to pay the maintenance fees forreasons that may have been unintentional yet not unavoidable,” the legislature included unintentional delay as a sufficient ground for acceptance. Slip op. at 7 (quoting H.R. Rep. No. 102-993, at 2 (1992)).

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Judges: Newman (author), Clevenger (dissenting), Wallach[Appealed from C.D. Cal., Judge Selna]

The Court also noted that the current regulation, 37 C.F.R. § 1.378(a), only requires a bare statement that the delay was unintentional, and that additional information delineating why the unintentional delay occurred is unnecessary. The PTO’s standard form, which contained the preprinted statement “[t]he delay in payment of the maintenance fee . . . was unintentional,” thus complied with both the statute and the regulation. Id.

Accordingly, the Court found that the NRL’s use of the standard form did not constitute clear and convincing evidence of withholding material information with the intent to deceive. Because the NRL acted promptly and appropriately, the Court reversed the district court’s grant of SJ of inequitable conduct and remanded for further proceedings.

Judge Clevenger dissented, suggesting the majority improperly framed the question. Judge Clevenger thought the Court should have assessed “whether the PTO would have granted [the NRL’s] revival petition if [it] had disclosed the circumstances surrounding the revival.” Clevenger Dissent at 2. Believing that the PTO would have denied the NRL’s petition (the PTO’s Final Rule notice regarding unintentional revival specifically foreclosed a revival in similar circumstances, and the mistake-of-fact arguments necessarily failed because (1) there was no supporting precedent and (2) the mistake-of-fact defense meant nothing when it arose out of a petitioner’s own actions), Judge Clevenger found the district court’s grant of SJ on materiality appropriate. Judge Clevenger found a significant question, however, as to whether the NRL knew of the information’s materiality and made a deliberate decision to withhold it; thus, according to Judge Clevenger, the district court’s grant of SJ on the intent prong was inappropriate.

*Sydney R. Kestle is a Law Clerk at Finnegan.

DISCLAIMER: The case summaries are intended to convey general information only and should not be construed as a legal

opinion or as legal advice. The firm disclaims liability for any errors or omissions and readers should not take any action that

relies upon the information contained in this newsletter. You should consult your own lawyer concerning your own situation

and any specific legal questions. This promotional newsletter does not establish any form of attorney-client relationship with

our firm or with any of our attorneys.

If you have any questions or need additional information, please contact:Esther H. Lim, Editor-in-ChiefJoyce Craig, Assistant EditorElizabeth D. Ferrill, Assistant EditorShana K. Cyr, Assistant EditorTrenton J. Roche, Assistant Editor

Washington, DC ▪ Atlanta, GA ▪ Boston, MA ▪ Palo Alto, CA ▪ Reston, VA ▪ Brussels ▪ Shanghai ▪ Taipei ▪ Tokyo

www.finnegan.com

Copyright © 2013 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP | All rights reserved

Last Month at the Federal Circuit

October 2013

Board Exceeded Its “Limited Role” in Reviewing Examiner’s Findings During ReexaminationYieyie Yang*

In Rambus Inc. v. Rea, No. 12-1634 (Fed. Cir. Sept. 24, 2013), the Federal Circuit reviewed an invaliditydecision made by the Board during reexamination proceedings. The Court affirmed the Board’s claim construction, vacated the Board’s obviousness decision, and remanded for further proceedings.

U.S. Patent No. 6,260,097 (“the ’097 patent”) is directed to a dynamic random-access memory (“DRAM”) that uses a synchronous memory system to transfer data. In synchronous systems, a clock signal alternates between a digital value of 0 and 1. The change in the clock signal from 0 to 1 is referred to as the “rising edge” of the clock, and the change in the signal from 1 to 0 is referred to as the “falling edge”of the clock. In conventional synchronous memory systems, the data transmitted to the memory tie up the system for a full cycle of the clock. The ’097 patent is directed to a system that transfers a portion of the data on the rising edge and a portion of the data on the falling edge of the clock signal, transferring data at twice the rate.

The PTO initiated inter partes reexamination of the ’097 patent claims and found that the reexaminedclaims were not patentable over two references: Unexamined Japanese Patent Application No. 56-88987 (“Inagaki”) and the Intel iAPX system manual and specification (“iAPX”). The examiner rejected the claims as anticipated by Inagaki and/or obvious in light of the iAPX system in view of Inagaki. The Board upheld the examiner’s rejections, and Rambus appealed.

Regarding anticipation, the Federal Circuit first considered whether the Board properly construed “external clock signal” as requiring the clock to be periodic during the data input phases, as opposed to being periodic for all system operations. Rambus contended that the intrinsic record required the“external clock signal” to be continuously periodic. The PTO countered that the claim language required only that the external clock signal synchronize data transfer and need not be periodic for all time. The Federal Circuit agreed with the PTO that the claimed method required that the “external clock signal” be periodic during data transfer, but that nothing in the claim language, specification, or prosecution history required the signal to be periodic for all time.

“The Board has a procedure for issuing a new ground of rejection in appeals of inter partes reexaminations. 37 C.F.R. § 41.77(b). This procedure ensures that appellants have an appropriate opportunity to respond and, if necessary, supplement the record before the examiner. We cannot let the Board shortcut

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Judges: Moore (author), Linn, O’Malley[Appealed from Board]

this procedure and deprive appellants of their due process rights.” Slip op. at 12-13.

Next, considering the construction of “write request,” the Court agreed with the Board that the claimed “write request” was not limited to a multiple-bit request and could contain a single bit. Rambus argued that the specification showed that each request carried at least two bits of information. Rambus alsoargued that the Board’s construction did not comport with the Federal Circuit’s holding in a prior case involving the same family of patents as the ’097 patent, Rambus Inc. v. Infineon Technologies AG, 318 F.3d 1081, 1093 (Fed. Cir. 2003).

The Court, however, found that the plain language of the claims-at-issue did not limit “write request” to a multiple-bit request, and that the specification disclosed a preferred embodiment involving a single bit. Although the Court noted that, in rare cases, a claim construction may exclude the preferred embodiment when there is highly persuasive evidentiary support, it concluded that there was no such evidentiary support here. Moreover, the Court did not find that the Board disregarded the Court’s construction in Infineon. The Court explained that in Infineon, the dispute centered on the accused infringer’s contentionthat the claimed “request” must include both address and control information, and at no time did the Court resolve whether the “write request” can be a single bit. Slip op. at 7 (citing Infineon, 318 F.3d at 1091).

Because the Federal Circuit concluded that the Board correctly construed the “external signal” and “write request” limitations, it affirmed the Board’s finding that Inagaki anticipates claims 1, 2, 7, 8, 10, and 14 of the ’097 patent.

With regard to the Board’s finding of obviousness, Rambus argued that the Board committed multiple errors, and the Federal Circuit agreed. First, the Court agreed that the Board erroneously placed theburden on Rambus to show nonobviousness. The Court stressed that “[i]n reexamination proceedings, ‘a preponderance of the evidence must show nonpatentability before the PTO may reject the claims of a patent application.’” Id. at 10-11 (quoting Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1427 (Fed. Cir. 1988)). The Court found that the Board concluded that Rambus had not demonstrated nonobviousness, which was legal error.

The Court also found that the Board exceeded its limited role to review the examiner’s decisions during prosecution. The Court explained that the legal framework under the APA limits the Board’s ability to rely on different grounds than the examiner in making rejections. According to the Court, “[t]he ultimate criterion is whether the appellant has had before the PTO a ‘fair opportunity to react to the thrust of the rejection.’” Id. at 11-12 (quoting In re Jung, 637 F.3d 1356, 1365 (Fed. Cir. 2011)). The Court found the Board erred in supplying its own reasons for combining iAPX and Inagaki after recognizing that the examiner’s finding was erroneous. The Court decided that since the Board has a procedure for issuing a new ground of rejection in appeals of inter partes reexaminations, it could not “let the Board shortcut this procedure and deprive appellants of their due process rights.” Id. at 13.

The Court also held that the Board erred in its treatment of objective evidence of nonobviousness. Particularly, the Court noted that the Board erroneously ignored Rambus’s uncontested evidence of long-felt need and industry praise due to the claimed dual-edge data transfer functionality and found the evidence lacked a nexus. Further, the Court emphasized that objective evidence of nonobviousness need only be reasonably commensurate with the scope of the claims, which “do[es] not require a patentee to produce objective evidence of nonobviousness for every potential embodiment of the claim.”Id. at 14. Accordingly, the Court decided that the Board erred in finding that Rambus’s evidence relating to the high-speed memory system embodiments was not commensurate with the scope of the claims.

Additionally, the Court concluded that Rambus’s licensing evidence linked its commercial success to the claimed dual-edge data transfer functionality and that the Board’s finding of lack of a nexus was unsupported and erroneous. Ultimately, the Court emphasized that “[w]hile objective evidence of

nonobviousness lacks a nexus if it exclusively relates to a feature that was ‘known in the prior art,’ the obviousness inquiry centers on whether ‘the claimed invention as a whole’ should have been obvious.”Id. at 15 (citations omitted). Despite the Board’s finding that Rambus’s objective evidence of nonobviousness pertained to the claimed dual-edge functionality that was disclosed in Inagaki and known in the prior art, the Court found that at least some of Rambus’s evidence relates to Rambus’s overall memory device architecture. Therefore, the Court instructed the Board to carefully consider the objective evidence of nonobviousness on Rambus’s patented design as a whole and make the final determination on remand.

*Yieyie Yang is a Law Clerk at Finnegan.

DISCLAIMER: The case summaries are intended to convey general information only and should not be construed as a legal

opinion or as legal advice. The firm disclaims liability for any errors or omissions and readers should not take any action that

relies upon the information contained in this newsletter. You should consult your own lawyer concerning your own situation

and any specific legal questions. This promotional newsletter does not establish any form of attorney-client relationship with

our firm or with any of our attorneys.

If you have any questions or need additional information, please contact:Esther H. Lim, Editor-in-ChiefJoyce Craig, Assistant EditorElizabeth D. Ferrill, Assistant EditorShana K. Cyr, Assistant EditorTrenton J. Roche, Assistant Editor

Washington, DC ▪ Atlanta, GA ▪ Boston, MA ▪ Palo Alto, CA ▪ Reston, VA ▪ Brussels ▪ Shanghai ▪ Taipei ▪ Tokyo

www.finnegan.com

Copyright © 2013 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP | All rights reserved

Last Month at the Federal Circuit

October 2013

Objective Evidence of Nonobviousness Must Be Commensurate in Scope with ClaimsFlora M. Amwayi*

In MeadWestVaco Corp. v. Rexam Beauty & Closures, Inc., Nos. 12-1518, -1527 (Fed. Cir. Sept. 26,2013), the Federal Circuit affirmed-in-part, reversed-in-part, and remanded the district court’s decision regarding validity and infringement of patents related to dispenser assemblies for perfumes. Specifically, the Court affirmed the district court’s claim constructions, denial of a motion to exclude expert testimony, denial of a motion for SJ of indefiniteness, and finding of infringement, but reversed and remanded the district court’s SJ of nonobviousness.

Plaintiffs MeadWestVaco Corporation and MeadWestVaco Calmar, Inc. (collectively “MWV”) and Defendants Rexam Beauty and Closures, Inc. and Rexam Dispensing Systems S.A.S. (collectively “Rexam”) and Valois of America, Inc. and Valois S.A.S. (collectively “Valois”) compete in the perfume packaging industry. U.S. Patent Nos. 7,718,132 (“the ’132 patent”) and 7,722,819 (“the ’819 patent”), assigned to MWV, are directed to an “invisible” dip tube for perfume that enhances the aesthetic appearance of the perfume bottle by appearing invisible when immersed in liquid. Both patents include claims specific to fragrance dispensers (“the fragrance-specific claims”). The ’132 patent, which is a continuation of the ’819 patent, includes additional claims (independent claim 15 and dependent claim 19) directed to generic dispensers (“the generic dispenser claims”).

MWV sued Rexam and Valois for infringement of both patents, and Rexam and Valois counterclaimed for DJ of invalidity and noninfringement. The district court construed multiple claim terms and also ruled on various SJ motions, granting MWV’s motion for SJ of nonobviousness and denying Rexam and Valois’s motion for SJ of indefiniteness. Finally, the district court found that Rexam and Valois did not infringe the fragrance-specific claims of both patents, but did infringe the ’132 patent’s generic dispenser claims. Rexam and Valois appealed.

On appeal, the Federal Circuit first addressed the issue of obviousness. The Court noted that the district court’s obviousness analysis did not distinguish between the fragrance-specific claims and the generic dispenser claims. Rather, the district court credited a variety of evidence in reaching its conclusion of nonobviousness, such as (1) evidence of long-felt need and commercial success in the perfume industry; (2) evidence that Valois and Rexam had reverse-engineered their own invisible dip tubes only afterobtaining samples of MWV’s dip tubes; and (3) evidence of belief that fluoropolymers (including EFEP, the transparent fluoropolymer MWV used for its dip tubes) were carcinogenic and therefore not to be used in fragrance products.

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Judges: Prost (author), O’Malley, Taranto[Appealed from E.D. Va., Judge Lee]

“Obviousness, like other grounds of invalidity, must be analyzed on a claim-by-claim basis.” Slip op. at 9 (citing Ortho Pharm. Corp. v. Smith, 959 F.2d 936, 942 (Fed. Cir. 1992)).

The Court rejected the district court’s obviousness analysis, explaining that the district court erred in failing to treat the generic dispenser claims (claims 15 and 19) differently from the fragrance-specificclaims. The Court reasoned that obviousness, like other grounds of invalidity, “must be analyzed on a claim-by-claim basis” as required by 35 U.S.C. § 282. Slip op. at 9 (citing Ortho Pharm. Corp. v. Smith,959 F.2d 936, 942 (Fed. Cir. 1992)). The Court further explained that objective evidence of nonobviousness “must be commensurate in scope with the claims which the evidence is offered to support.” Id. (quoting Asyst Techs., Inc. v. Emtrak, Inc., 544 F.3d 1310, 1316 (Fed. Cir. 2008)).

The Court further found that the district court erred in resolving material issues of fact in favor of the moving party, MWV, at the SJ stage. For instance, Valois presented evidence contradicting MWV’s claimof commercial success, evidence casting doubt on MWV’s teaching away evidence, and evidence that one of ordinary skill in the art would not have believed EFEP was carcinogenic. The Court held that this evidence created material issues of fact inappropriate for resolution on SJ.

The Federal Circuit next considered the district court’s holdings on claim construction, infringement, and indefiniteness. Since Valois failed to show any clear error in the district court’s claim construction determination and infringement analysis, the Court affirmed the district court’s claim construction, and thedistrict court’s finding of infringement of the ’132 patent’s generic dispenser claims and noninfringement of the fragrance-specific claims of both patents.

The Court then considered Rexam’s motion to exclude expert testimony. Rexam argued that MWV’s expert failed to follow testing parameters for calculating X-ray diffraction crystallinity as per the districtcourt’s claim construction, and the expert’s testimony was therefore legally irrelevant to proving infringement. Specifically, MWV’s expert testified that, using his testing parameters, which differed slightly from the district court’s claim construction, he was able to conclude that Rexam’s productsinfringed the ’132 patent under the district court’s construction. Rexam used the expert’s deviations from the district court’s claim construction to cast doubt on his infringement conclusions, but the Court noted that this did not make MWV’s expert testimony irrelevant, and that Rexam did not raise any other basis for excluding the testimony. Because Rexam failed to show that the district court abused its discretion in allowing MWV’s expert to testify, the Court affirmed the district court’s denial of Rexam’s motion toexclude.

Finally, the Court affirmed the district court’s denial of SJ of indefiniteness, holding that Rexam and Valois had waived the issue by failing to raise it at the bench trial.

*Flora M. Amwayi is a Law Clerk at Finnegan.

DISCLAIMER: The case summaries are intended to convey general information only and should not be construed as a legal

opinion or as legal advice. The firm disclaims liability for any errors or omissions and readers should not take any action that

relies upon the information contained in this newsletter. You should consult your own lawyer concerning your own situation

and any specific legal questions. This promotional newsletter does not establish any form of attorney-client relationship with

our firm or with any of our attorneys.

If you have any questions or need additional information, please contact:

Esther H. Lim, Editor-in-ChiefJoyce Craig, Assistant EditorElizabeth D. Ferrill, Assistant EditorShana K. Cyr, Assistant EditorTrenton J. Roche, Assistant Editor

Washington, DC ▪ Atlanta, GA ▪ Boston, MA ▪ Palo Alto, CA ▪ Reston, VA ▪ Brussels ▪ Shanghai ▪ Taipei ▪ Tokyo

www.finnegan.com

Copyright © 2013 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP | All rights reserved

Last Month at the Federal Circuit

October 2013

Pledge Not to Infringe Cannot Override Conclusion of Infringement Based on Seeking FDA Approval to Market Generic Compound Within Scope of Valid PatentChiaki Fujiwara*

In Sunovion Pharmaceuticals, Inc. v. Teva Pharmaceuticals USA, Inc., No. 13-1335 (Fed. Cir. Sept. 26,2013), the Federal Circuit reversed the district court’s grant of SJ of noninfringement, concluding that, although the district court did not err in construing the asserted claims, Sunovion Pharmaceuticals, Inc. (“Sunovion”) was entitled to a judgment of infringement as a matter of law under 35 U.S.C.§ 271(e)(2)(A).

U.S. Patent No. 6,444,673 (“the ’673 patent”), owned by Sunovion, is directed to pharmaceutical compositions of the single-enantiomer drug eszopiclone, the active ingredient in the sleep medication marketed as Lunesta®. The claim recites that the compound is “in the form of its dextrorotatory isomer,”i.e., eszopiclone, and “essentially free of its levorotatory isomer.” Slip op. at 3 (citation omitted). In approving Lunesta®, the FDA required that each tablet contain not more than 0.3% of eszopiclone’s corresponding levorotatory enantiomer. The ’673 patent is listed in the FDA’s publication known as the Orange Book.

Dr. Reddy’s Laboratories, Ltd. and Dr. Reddy’s Laboratories, Inc. (collectively “Reddy”) submitted to the FDA an ANDA including a paragraph IV certification with respect to the ’673 patent, seeking approval to market generic eszopiclone tablets prior to the expiration of the ’673 patent. Sunovion sued Reddy for patent infringement under 35 U.S.C. § 271(e)(2)(A). Reddy’s original ANDA specification requested approval for generic eszopiclone products with not less than 0.3% and not more than 1.0% of the levorotatory isomer, but the FDA required Reddy to “tighten up” the levorotatory limit to not more than0.3%. In response, Reddy revised its ANDA specification to restrict the levorotatory limit to not more than 0.6%.

Following a Markman hearing, the district court construed the claim term “essentially free” to mean “less than 0.25% of [the] levorotatory isomer” based on an inventor’s declaration and the prosecution history. Id. at 4 (alteration in original) (citation omitted). Reddy moved for SJ of noninfringement. The district court initially denied Reddy’s motion, but then permitted Reddy to file a renewed motion for SJ of noninfringement accompanied by a “certification” that Reddy would not market an eszopiclone product containing less than 0.3% of the levorotatory isomer. Reddy submitted a declaration from one of itsemployees vowing to the district court, but not to the FDA, that Reddy would only market generic eszopiclone tablets containing 0.3-0.6% levorotatory isomer. The district court granted Reddy’s renewed motion for SJ, and Sunovion appealed.

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Judges: Lourie (author), Schall, Reyna[Appealed from D.N.J., Judge Wigenton]

On appeal, the Federal Circuit first held that the district court correctly construed the claim term “essentially free” as “less than 0.25% of [the] levorotatory isomer.” The Court found that “essentially free”did not have a plain or ordinary meaning and that the specification offered no guidance on the issue. The Court found, however, that the totality of evidence, including the prosecution history and a concurrent interference, showed that the applicants repeatedly defined their invention as containing less than 0.25% of the levorotatory isomer.

“We therefore hold that any so-called certification pledging not to infringe cannot override the conclusion that when a drug manufacturer seeks FDA approval to market a generic compound within the scope of a valid patent, it is an infringement as a matter of law.” Slip op. at 15.

The Federal Circuit next held that the district court erred in granting SJ of noninfringement. The Court noted that under the Hatch-Waxman framework, “the ultimate infringement question is determined bytraditional patent law principles and, if a product that an ANDA applicant is asking the FDA to approve for sale falls within the scope of an issued patent, a judgment of infringement must necessarily ensue.” Id. at 12. The Court stated that “the fact that Reddy either tells the court that its manufacturing guidelines will keep it outside the scope of the claims or has even filed a declaration in the court stating that it will stay outside the scope of the claims does not overcome the basic fact that it has asked the FDA to approve, and hopes to receive from the FDA, approval to market a product within the scope of the issued claims.” Id. The Court noted that Reddy’s amended ANDA specification sought FDA approval for generic eszopiclone products with 0.0-0.6% levorotatory isomer, which fell within the scope of the “less than 0.25%” limitation of the claims.

The Court rejected as misplaced Reddy’s focus on its certification, stating, “Allowing Reddy to avoid infringement based on its unconventional and unenforceable ‘guarantee’ when it is asking for and may receive FDA approval to market a product within the scope of the innovator’s patent, would be incompatible with the basic principles of patent law.” Id. at 13. The Court reasoned that if Reddy had no intent to infringe, it should not have requested approval to market a product within the scope of the claim.

The Court also rejected Reddy’s argument that Sunovion could later test Reddy’s approved andcommercially available generic products, and sue Reddy for infringement under § 271(a). The Court explained that this would unnecessarily defer resolution of infringement until after ANDA approval, going against the purpose of the Hatch-Waxman framework. The Court disagreed with Reddy’s reliance on Bayer AG v. Elan Pharmaceutical Research Corp., 212 F.3d 1241 (Fed. Cir. 2000), and Glaxo, Inc. v. Novopharm, Ltd., 110 F.3d 1562 (Fed. Cir. 1997), which held that approved compounds outside the scope of the relevant claims did not infringe. The Court stated that, as here, “if an ANDA specification defines a compound such that it meets the limitations of an asserted claim, then there is almost never a genuine issue of material fact that the claim is infringed.” Slip op. at 14.

The Court held that a certification pledging not to infringe could not override the conclusion that when a drug manufacturer seeks FDA approval to market a generic compound within the scope of a valid patent, it is infringement as a matter of law. Accordingly, the Court reversed the district court’s SJ of noninfringement.

*Chiaki Fujiwara is a Law Clerk at Finnegan.

DISCLAIMER: The case summaries are intended to convey general information only and should not be construed as a legal

opinion or as legal advice. The firm disclaims liability for any errors or omissions and readers should not take any action that

relies upon the information contained in this newsletter. You should consult your own lawyer concerning your own situation

and any specific legal questions. This promotional newsletter does not establish any form of attorney-client relationship with

our firm or with any of our attorneys.

If you have any questions or need additional information, please contact:Esther H. Lim, Editor-in-ChiefJoyce Craig, Assistant EditorElizabeth D. Ferrill, Assistant EditorShana K. Cyr, Assistant EditorTrenton J. Roche, Assistant Editor

Washington, DC ▪ Atlanta, GA ▪ Boston, MA ▪ Palo Alto, CA ▪ Reston, VA ▪ Brussels ▪ Shanghai ▪ Taipei ▪ Tokyo

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Copyright © 2013 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP | All rights reserved

Last Month at the Federal Circuit

October 2013

Looking Ahead

On October 1, 2013, the U.S. Supreme Court granted certiorari in two patent cases. First, in Highmark Inc. v. Allcare Health Management Systems, Inc., No. 12-1163, the Court will address “[w]hether a district court’s exceptional-case finding under 35 U.S.C. § 285, based on its judgment that a suit is objectivelybaseless, is entitled to deference.” Second, in Octane Fitness, LLC v. ICON Health & Fitness, Inc., No. 12-1184, the Court will address whether “the Federal Circuit’s promulgation of a rigid and exclusive two-part test for determining whether a case is ‘exceptional’ under 35 U.S.C. § 285 improperly appropriate[s] a district court’s discretionary authority to award attorney fees to prevailing accusedinfringers in contravention of statutory intent and [the Supreme] Court’s precedent, thereby raising the standard for accused infringers (but not patentees) to recoup fees and encouraging patent plaintiffs to bring spurious patent cases to cause competitive harm or coerce unwarranted settlements fromdefendants.” Stay tuned to see how these decisions will affect the Federal Circuit’s analyses and opinions in these areas.

DISCLAIMER: The case summaries are intended to convey general information only and should not be construed as a legal

opinion or as legal advice. The firm disclaims liability for any errors or omissions and readers should not take any action that

relies upon the information contained in this newsletter. You should consult your own lawyer concerning your own situation

and any specific legal questions. This promotional newsletter does not establish any form of attorney-client relationship with

our firm or with any of our attorneys.

If you have any questions or need additional information, please contact:Esther H. Lim, Editor-in-ChiefJoyce Craig, Assistant EditorElizabeth D. Ferrill, Assistant EditorShana K. Cyr, Assistant EditorTrenton J. Roche, Assistant Editor

Washington, DC • Atlanta, GA • Cambridge, MA • Palo Alto, CA • Reston, VA • Brussels • Shanghai • Taipei • Tokyo

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Copyright © 2013 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP | All rights reserved

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Last Month at the Federal Circuit

October 2013

Spotlight Info

In Sunovion Pharmaceuticals, Inc. v. Teva Pharmaceuticals USA, Inc., No. 13-1335 (Fed. Cir. Sept. 26, 2013), the Federal Circuit reversed the district court’s grant of SJ of noninfringement, concluding that, although the district court did not err in construing the asserted claims, Sunovion Pharmaceuticals, Inc. was entitled to a judgment of infringement as a matter of law under 35 U.S.C. § 271(e)(2)(A). The Court held that a certification pledging not to infringe could not override the conclusion that when a drug manufacturer seeks FDA approval to market a generic compound within the scope of a valid patent, it is infringement as a matter of law. See this month’s edition of Last Month at the Federal Circuit for a full summary of this decision.

DISCLAIMER: The case summaries are intended to convey general information only and should not be construed as a legal

opinion or as legal advice. The firm disclaims liability for any errors or omissions and readers should not take any action that

relies upon the information contained in this newsletter. You should consult your own lawyer concerning your own situation

and any specific legal questions. This promotional newsletter does not establish any form of attorney-client relationship with

our firm or with any of our attorneys.

If you have any questions or need additional information, please contact:Esther H. Lim, Editor-in-ChiefJoyce Craig, Assistant EditorElizabeth D. Ferrill, Assistant EditorShana K. Cyr, Assistant EditorTrenton J. Roche, Assistant Editor

Washington, DC • Atlanta, GA • Cambridge, MA • Palo Alto, CA • Reston, VA • Brussels • Shanghai • Taipei • Tokyo

www.finnegan.com

Copyright © 2013 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP | All rights reserved

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