Federal Circuit Update (January 2017)

January 26, 2017

This January 2017 edition of Gibson Dunn’s Federal Circuit Update discusses current news and pending Federal Circuit cases before the Supreme Court and provides an overview of the oral argument process and panel assignment at the Federal Circuit.  Also included are summaries of the two pending en banc cases involving motions to amend claims during inter partes review and judicial review of timeliness determinations in inter partes review as well as a series of key recent decisions relating to the requirements for standing when appealing a decision of the Patent Trial & Appeal Board ("PTAB"), divided infringement, and indefiniteness of claims using terms of degree. 

Federal Circuit News

Former Chief Judge Rader is reportedly in consideration for leadership of the U.S. Patent and Trademark Office, should current director Michelle Lee be replaced (covered by law.com). 

The Supreme Court has granted certiorari on seven cases from the Federal Circuit.  Below is a table summarizing the status of those cases.   

Upcoming En Banc Federal Circuit Cases

In re Aqua Prods., Inc., No. 15-1177 (Fed. Cir.):  Allocations of the burdens of persuasion and production when a patent owner moves to amend in an inter partes review proceeding.

The PTAB instituted an inter partes review proceeding against Aqua’s patent, which relates to automated swimming pool cleaners.  Aqua moved to amend the challenged claims to distinguish the cited prior art.  The PTAB, however, denied Aqua’s motion, determining that Aqua failed to carry its burden of showing patentability of the proposed substitute claims over the prior art of record.  On appeal, the PTO intervened to defend the PTAB’s decision.  The Federal Circuit affirmed, holding that the PTAB properly considered all of the arguments that Aqua had raised and that precedent upheld the PTAB’s approach of allocating to the patentee the burden of showing that the proposed amendments would overcome the prior art of record (decision available here).  Eight amicus briefs have been filed: three in favor of neither party (American Intellectual Property Law Association, Intellectual Property Owners Association, and Houston Intellectual Property Law Association), three in favor of Aqua Products (Case Western Reserve University School of Law Intellectual Property Venture Clinic and Ohio Venture Association, Pharmaceutical Research and Manufacturers of America, and Biotechnology Innovation Organization), and two in favor of the PTO (Askeladden, L.L.C. and Internet Association et al.).  Oral argument was heard on December 9, 2016.

Questions Presented:

1. When the patent owner moves to amend its claims under 35 U.S.C. § 316(d), may the PTO require the patent owner to bear the burden of persuasion, or a burden of production, regarding patentability of the amended claims as a condition of allowing them?  Which burdens are permitted under 35 U.S.C. § 316(e)?

2. When the petitioner does not challenge the patentability of a proposed amended claim, or the PTAB thinks the challenge is inadequate, may the PTAB sua sponte raise patentability challenges to such a claim?  If so, where would the burden of persuasion, or a burden of production, lie?

Wi-Fi One, LLC v. Broadcom Corp., No. 15-1944 (Fed. Cir.):  The Federal Circuit’s jurisdiction to review the PTAB’s determination that a petitioner is not time-barred under 35 U.S.C. § 315(b). 

The PTAB instituted an inter partes review proceeding against Wi-Fi One’s patent, which is directed to a method for improving the efficiency by which messages are sent in a telecommunications system.  Wi-Fi One argued that Broadcom was time-barred under § 315(b) from seeking review because Broadcom was in privity with time-barred district court litigants.  The PTAB disagreed, finding that Wi-Fi One did not establish that Broadcom had sufficient control over district court litigation to support a privity finding.  On appeal, the Federal Circuit held that it does not have jurisdiction to review the PTAB’s determination that Broadcom was not time-barred, holding that the Supreme Court’s decision in Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016), did not implicitly overrule prior Federal Circuit precedent on the issue (decision available here).  No amicus briefs have been filed to date.  Amicus briefs in support of neither party or in support of Wi-Fi One must be filed by February 23, 2017, and amicus briefs in support of Broadcom must be filed by March 27, 2017.  Oral argument has not yet been scheduled. 

Question Presented:

Should this court overrule Achates Reference Publishing, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015) and hold that judicial review is available for a patent owner to challenge the PTO’s determination that the petitioner satisfied the timeliness requirement of 35 U.S.C. § 315(b) governing the filing of petitions for inter partes review?

Federal Circuit Practice Update

Oral arguments in the Federal Circuit are held in every case where the parties are represented by counsel, subject to the exceptions provided in Federal Rule of Appellate Procedure 34.  Generally, when all briefs and the joint appendix have been filed, the clerk will enter an order instructing the parties to advise the court of any scheduling conflicts in the next three court sessions (or thereafter).  See Practice Note to Rule 34.  A computer program then assigns the case to a panel on one of the available dates.  See IOP #3.  The Federal Circuit’s practice notes state that cases are usually calendared for oral argument within two months after the briefs and joint appendix are filed, see Practice Note to Rule 34, but it is not uncommon to receive a later calendar date, particularly if there are scheduling conflicts.  The parties are informed of the date for oral argument approximately 30 days in advance of the argument, but do not learn who the panel members are until the morning of the argument.  At the argument, each side receives 15 minutes, some of which the appellant may reserve for rebuttal.  The presiding judge may allocate more time to either side (or both sides) depending on the nature of the case and the flow of the argument.  Oral arguments are open to the public and are recorded (audio only), and the audio files are generally available on the Federal Circuit’s website very shortly after the court session is concluded for the day (audio files available here).

Key Case Summaries (Dec. 2016 – Jan. 2017)

Phigenix, Inc. v. ImmunoGen, Inc., No. 16-1544 (Fed. Cir. Jan. 9, 2017): Competing licensing entity lacked standing to appeal inter partes review decision.

Phigenix, Inc. is the assignee and owner of U.S. Patent No. 8,080,534, which relates generally to compositions used to treat certain cancers.  ImmunoGen, Inc. is the assignee and owner of U.S. Patent No. 8,337,856, which also relates generally to compositions used to treat certain cancers.  ImmunoGen licensed its technology to Genentech Inc., which used the technology to produce and sell a drug.  Phigenix also attempted to license its patent to Genentech, but Genentech refused.  Phigenix thereafter sued Genentech for patent infringement and initiated an inter partes review proceeding against ImmunoGen and the ‘856 patent.  The PTAB ultimately held that the ‘856 patent was not invalid over Phigenix’s identified references.  Phigenix appealed that decision to the Federal Circuit.

The Federal Circuit (Wallach, J.) dismissed the appeal for lack of injury-in-fact to support standing.  The Federal Circuit held that even if Article III standing is not always required to appear before an administrative agency, it is required to appeal a decision by that agency to an Article III court, such as the Federal Circuit.  Because standing will not always come up before the administrative agency, appellants may supplement the record on appeal by, for example, filing declarations and affidavits demonstrating standing.  While Phigenix did submit declarations purporting to identify injury-in-fact (for example, by alleging that the existence and licensing of the ‘856 patent necessarily decreased the available money left to be licensed to the ‘534 patent), the court was unconvinced.  Phigenix’s evidence was too hypothetical–it failed to submit any evidence that it ever licensed the ‘534 patent at all, much less to an entity that had previously obtained a license to the ‘856 patent.  The court also rejected Phigenix’s argument that the statutory right to appeal and inter partes review conferred standing.  While denial of a statutory right can confer standing, Phigenix had been deprived of no such right here because it exercised its right to appeal.

Eli Lilly & Co. v. Teva Parenteral Medicines, Inc., No. 15-2067 (Fed. Cir. Jan. 12, 2017): Doctor’s instructions can satisfy the direction or control test for divided direct infringement.

Eli Lilly & Co. owns U.S. Patent No. 7,772,209, which relates to methods for administering a chemotherapy drug by pre-treating patients with certain vitamins to reduce toxicity of the chemotherapy drug.  Teva Parenteral Medicines, Inc. and others notified Eli Lilly that they had filed abbreviated new drug applications seeking approval to market generic versions of a drug allegedly practicing the ‘209 patent.  Eli Lilly sued; the district court held that the patent claims infringed and were not invalid.  Defendants appealed.

On appeal, the Federal Circuit (Prost, J.) addressed whether there was direct infringement of the method steps.  The parties agreed that no single actor performed all steps of the asserted claims.  Rather, the doctors performed some steps, and the patients performed other steps.  The court held that the acts of the patients were "directed and controlled" by the doctors, and thus attributable to the doctors.  The doctors conditioned a benefit (receiving the chemotherapy drug) on performance of certain of the claimed method steps (taking the pre-treatment vitamins).  And the doctors established the manner or timing of that performance by, for example, setting patients’ dosage levels that fell within the range of the patented claims.

Sonix Tech. Co. v. Publications Int’l, Ltd., No. 16-1449 (Fed. Cir. Jan. 5, 2017): Indefiniteness of patent claims with terms of degree.

Sonix Technology Co. owns U.S. Patent No. 7,328,845, which is directed to a system and method for using a "graphical indicator" (e.g., a matrix of small dots) to encode information on the surface of an object.  The patent purports to improve on conventional techniques (e.g., a bar code) by rendering the graphical indicator "visually negligible."  The defendants moved for summary judgment that the term "visually negligible" was indefinite because it was purely subjective and neither the claim language nor the specification provided adequate guidance on the scope of the claims.  The district court granted the motion, which Sonix appealed.

On appeal, the Federal Circuit (Lourie, J.) reversed the district court’s finding of indefiniteness.  The Federal Circuit first reiterated that it "review[s] a district court’s determination that a claim is invalid as indefinite under 35 U.S.C. § 112 ¶ 2 de novo, although . . . any factual findings by the district court based on extrinsic evidence are reviewed for clear error."  Here, however, even though the court received expert opinions on indefiniteness, "the district court’s conclusions of subjectivity and lack of an objective standard are not findings subject to clear error review."  The district court even explained that extrinsic evidence was not necessary for its consideration of the issue.  The Federal Circuit’s review was thus de novo in its entirety. 

On the merits, the court reversed, finding that the term "visually negligible" was not purely subjective, such as the term "aesthetically pleasing" (see Datamize, LLC v. Plumtree Software, Inc., 417 F.3d 1342 (Fed. Cir. 2005)) or the phrase "in an unobtrusive manner that does not distract a user" (see Interval Licensing LLC v. AOL, Inc., 766 F.3d 1364 (Fed. Cir. 2014)) from its prior decisions.  Whether something is "visually negligible," according to the court, involves what can be seen by the normal human eye, which provides an objective baseline through which to interpret the claim.  The court then turned to the specification, which "is key to determining whether a term of degree is indefinite."  Here, the specification provided guidance on how to create visually negligible indicators, and specific examples that provide points of comparison for the result.  The court further found that the prosecution history made reversal compelling because no one involved in either the first or second reexamination had any apparent difficulty in determining the scope of "visually negligible."  Finally, the court noted that the defendants apparently understood the meaning of "visually negligible" from the beginning of the litigation because neither their initial nor final invalidity contentions argued that the term was indefinite. 

Upcoming Oral Argument Calendar

For a list of upcoming arguments at the Federal Circuit, please click here. 

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Federal Circuit.  Please contact the Gibson Dunn lawyer with whom you usually work or the authors of this alert:

Blaine H. Evanson – Los Angeles (213-229-7228, [email protected])
Blair A. Silver – Washington, D.C. (202-955-8690, [email protected])

Please also feel free to contact any of the following practice group co-chairs or any member of the firm’s Appellate and Constitutional Law or Intellectual Property practice groups: 

Appellate and Constitutional Law Group:
Mark A. Perry – Washington, D.C. (202-887-3667, [email protected])
James C. Ho – Dallas (214-698-3264, [email protected])
Caitlin J. Halligan – New York (212-351-4000, [email protected])

Intellectual Property Group:
Josh Krevitt – New York (212-351-4000, [email protected])
Wayne Barsky - Los Angeles (310-552-8500, [email protected])
Mark Reiter – Dallas (214-698-3100, [email protected])

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