Federal Circuit Update (May 2017)

May 24, 2017

This May 2017 edition of Gibson Dunn’s Federal Circuit Update discusses the upcoming 2017 Federal Circuit Bar Association Bench & Bar Conference, summarizes a recent decision regarding patent venue from the Supreme Court, and also catalogues both the Federal Circuit cases pending before the Supreme Court and the two pending en banc cases at the Federal Circuit.  This update also summarizes three key decisions from the Federal Circuit these last two months relating to patent eligibility, claim construction, and damages.

Federal Circuit News

2017 Federal Circuit Bar Association Bench & Bar Conference.  The Federal Circuit Bar Association will be holding its annual Bench & Bar Conference between June 21–24, 2017.  This year’s Bench & Bar Conference will be held in Coeur d’Alene, Idaho at The Coeur d’Alene Resort.  Panels are expected to include eight Federal Circuit Judges, including Chief Judge Prost and Circuit Judges Plager, Clevenger, Moore, O’Malley, Reyna, Hughes, and Stoll.  Gibson Dunn’s Mark Perry will be also be a panelist on the Supreme Court Review 2017 Panel on June 23rd.  For more information, please visit the Federal Circuit Bar Association’s website (here).

The Supreme Court.  The Supreme Court issued an important decision on appeal from the Federal Circuit since our last update regarding patent venue. 

In TC Heartland LLC v. Kraft Foods Group Brands LLC, No. 16-341 (May 22, 2017) (available here), the Supreme Court addressed the limits of venue for patent infringement cases for domestic corporations.  In an 8-0 decision written by Justice Thomas, the Supreme Court held that venue for patent infringement cases based on where a domestic corporation "resides" is limited to its state of corporation under 28 U.S.C. § 1400(b).  Section 1400(b) authorizes a patent infringement action to be brought "in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business."  28 U.S.C. § 1400(b).  Consistent with its prior decision in Fourco Glass Co. v. Transmirra Products Corp., 353 U. S. 222 (1957), the Court reasoned that section 1400(b) merely recodified a prior statute that limited patent venue to where a defendant was an "inhabitant," or a district in which the defendant both maintained a "regular and established place of business" and committed an act of infringement.  The Court then held that Congress’ later revisions to the general venue statute under 28 U.S.C. § 1391(c) expanding venue to any judicial district where a corporation is subject to personal jurisdiction did not alter the meaning of section 1400(b).  The Court concluded there was no "indication that Congress intended to alter the meaning of §1400(b) as interpreted in Fourco."

In addition, there are also five cases from the Federal Circuit on the Supreme Court’s docket, four of which have been argued but not yet decided.  Below is a table summarizing the status of each pending case.

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 ("IPR") proceeding.

The Patent Trial and Appeal Board ("PTAB") instituted an IPR 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 panel 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.)  The en banc court granted review, and 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 IPR proceeding against Wi-Fi One’s patent, which is directed to a method for improving the efficiency by which messages are sent from a receiver to a sender in a telecommunications system.  Before the Board, 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 Board 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 panel held that it does not have jurisdiction to review the Board’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.)  The en banc court granted review.  To date, two amicus briefs have been filed in support of Wi-Fi One (WesternGeco LLC and 3DS Innovations, LLC), eight amicus briefs have been filed in support of neither party (Jeremy Cooper Doerre, New York Intellectual Property Law Association, Federal Circuit Bar Association, Intellectual Property Owners Association, Boston Patent Law Association, Professors of Patent and Administrative Law, American Intellectual Property Law Association, and Biotechnology Innovation Organization), and three amicus briefs have been filed in support of Broadcom (Oracle, Intel, and Apple).  Oral argument was heard on May 4, 2017. 

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

This month, we are highlighting the timing and procedure of participating in a pending appeal as an amicus curiae—a non-party "friend of the court."

Timing.  When a party wishes to participate as an amicus curiae in a pending appeal, the timing of that filing varies with the amicus curiae’s position and whether the amicus is being filed during initial consideration of the case on the merits or during petitioning for rehearing or hearing en banc.  During initial consideration of the merits, the amicus brief must be filed no later than 7 days after the principal brief of the party being supported is filed.  Fed. R. App. P. 29(a)(6).  If no party is being supported, the amicus brief must be filed no later than 7 days after the principal brief is filed.  Id.   During petitioning for rehearing or hearing en banc, an amicus brief must be filed within 14 days of the date of filing of the petition or response that the amicus supports, or, if the brief support neither party, within 14 days of the filing of the petition.  Fed. Cir. R. 35(g); Fed. Cir. R. 40(g).

Procedure.  An amicus curiae should seek consent of the parties prior to filing its brief.  Fed. Cir. R. 29(c).  If the parties to the appeal do not consent, the amicus curiae must file a motion for leave to file its amicus brief accompanying its proposed brief.  Fed. R. App. P. 29(a)(2)–(3).  An amicus brief submitted in connection with a petition for rehearing or hearing en banc requires a motion for leave to file, unless otherwise ordered by the court.  Fed. Cir. R. 35(g); Fed. Cir. R. 40(g).  An amicus curiae must also file an entry of appearance and certificate of interest.  Fed. Cir. R. 29(a); Practice Notes, Fed. Cir. R. 29.   Paper copies of the filing must be filed within five business days of acceptance of electronic filing.  Fed. Cir. R. 29(a).  An amicus curiae can only participate in oral argument with the court’s permission and may not file a reply.  Fed. R. App. P. 29(a)(7), (8).

Content.  An amicus brief during initial consideration of the case may be no more than half the length of the principal brief (usually limiting the amicus brief to 7,000 words), unless the court orders otherwise.   Fed. R. App. P. 29(a)(5).  Amicus briefs submitted in connection with a petition for rehearing or hearing en banc may not exceed 2,600 words or 10 pages if handwritten or typewritten.  Fed. Cir. R. 35(g); Fed. Cir. R. 40(g); see Fed. R. App. P. 29(b)(4). The amicus brief must include:  (1) an identification of which party is supported; (2) a statement whether the brief supports affirmance or reversal; (3) a corporate disclosure statement (if needed); (4) a table of contents; (5) a table of authorities; (6) a concise statement of the identity of the amicus curiae, its interest in the case, and the source of its authority to file; (7) an argument; and (8) a certificate of compliance with the length requirements.  Fed. R. App. P. 29(a)(4)(A)–(F) (also requiring compliance with Fed. R. App. P. 32).  In addition, the brief must contain specific statements regarding relationships between the parties and the amicus and the financial contributions to fund the brief.  See Fed. R. App. P. 29(a)(4)(E).

Key Case Summaries (April 2017 – May 2017)

Rembrandt Wireless Techs., LP v. Samsung Elecs. Co., No. 16-1729 (Fed. Cir. Apr. 17, 2017): Filing post-complaint statutory disclaimer of a patent claim did not excuse plaintiff’s failure to mark products embodying that claim in calculating damages.

Rembrandt sued Samsung for patent infringement in the Eastern District of Texas.  Previously, Rembrandt had licensed the asserted patent to a third party, Zhone Technologies.  Zhone sold products embodying one of the asserted claims but did not mark those products with the patent number, and the licensing agreement failed to require it to do so.  After Samsung sought to limit Rembrandt’s damages based on Zhone’s failure to mark, Rembrandt immediately filed a statutory disclaimer.  At trial, the jury determined that Samsung infringed the remaining claims and awarded $15.7 million in damages.  Samsung argued that the damages limitation should be limited because Zhone failed to mark products embodying the then-disclaimed claim, but the district court rejected that argument.  Samsung appealed, both as to that issue and others.

The Federal Circuit (Stoll, J.) affirmed with respect to the other issues, but vacated the court’s decision on the damages limitation.  As the court explained, the marking provisions are intended help avoid innocent infringement, encourage patentees to give notice to the public that the article is patented, and aid the public in identifying whether an article is patented.  Allowing a patent holder to obtain full damages simply by disclaiming one of its claims provides an end-run around the statutory provisions designed to the protect the public.  "[W]hile we have held that a disclaimer relinquishes the rights of the patent owner, we have never held that the patent owner’s disclaimer relinquishes the rights of the public."  However, that left a second issue to be resolved: whether failure to mark a product embodying a single claim limited damages with respect to any claim on the patent, or only that claim.  The Federal Circuit noted that that was a novel question, and remanded that question to the district court.

The Medicines Co. v. Mylan Inc., Nos. 15-1113, -1151, -1181 (Fed. Cir. Apr. 6, 2017):  Claims should be construed, to the extent consistent with the specification and prosecution history, to preserve validity.

After Mylan submitted an ANDA to produce a generic form of ANGIOMAX® (bivalirudin), The Medicines Company’s blood-clotting drug, Medicines asserted two patents against Mylan: U.S. Patent Nos. 7,582,727 and 7,598,343.  These patents were not the first patents covering bivalirudin (which was in the prior art).  Rather, these follow-on patents claimed pharmaceutical "batches" of bivalirudin with minimized impurities.  Both specifications disclosed means of "efficient[ly] mixing" batches to obtain the required consistency, but only the ‘343 patent claims expressly recited that the batches needed to be made using "efficient mixing" techniques.   Mylan’s process did not use an "efficient mixing" technique.  Thus, at the district court level, Mylan was found to infringe only claims of the ‘727 patent, which lacked the efficient mixing limitation.  On appeal, Mylan argued that the ‘727 patent claims should also be construed to require "efficient mixing."  The Federal Circuit (Dyk, J.) agreed. 

According to the Federal Circuit, both patents’ specifications describe the use of "efficient mixing" to produce sufficiently consistent "batches" of bivalirudin.  The panel held that the ‘727 patent "cannot be literally construed to cover individual batches" made without efficient mixing as "[s]uch construction would render the claims of the ‘727 patent invalid in light of Medicines’ numerous pre-critical date sales."  Rather, in light of the discussions in the specification and prosecution history concerning use of "efficient mixing" to control purity, the Federal Circuit held that the "batches" claim element itself "requires batch consistency, which, according to the patents in suit [i.e., specifications] is achieved through efficient mixing."  To then define the now-required "efficient mixing" limit, the panel set aside "portions of the specification’s detailed description of efficient mixing" that it found "vague and unhelpful."  Instead, the panel focused on one working example in the specification.  Given the augmented construction in light of that example in the specification, Mylan was found not to infringe either patent.

RecogniCorp, LLC v. Nintendo Co., No. 16-1499 (Fed. Cir. Apr. 28, 2017):  Claims directed to the abstract idea of encoding and decoding image data are patent-ineligible under Section 101.

RecogniCorp sued Nintendo for patent infringement, asserting claims related to compressing and decompressing facial images such that the images would require less memory and bandwidth.  Nintendo filed a motion for judgment on the pleadings, arguing that the claims were directed to ineligible subject matter under 35 U.S.C. § 101.  The district court granted Nintendo’s motion, ruling that the claims were directed to "the abstract idea of encoding and decoding composite facial images using a mathematical formula" and did not contain any inventive concept.

The Federal Circuit (Reyna, J.) affirmed.  At step 1 of the Alice framework, the court first explained that the claim is directed to the abstract idea of encoding and decoding image data, which reflects standard encoding and decoding concepts long utilized to transmit information.  The Federal Circuit analogized to Morse code, combo meal numbers at fast food restaurants, and "one if by land, two if by sea."  According to the court, moreover, the claims simply organized existing data into a new form, which was held to be an abstract idea in several previous cases.

Turning to step 2 of Alice, the court rejected RecogniCorp’s argument that the claims were directed to a particular encoding process that utilized "facial feature element codes" and "pictorial entity symbols."  The Federal Circuit reasoned that, although the claims recited a specific mathematical formula for the encoding, "[a] claim directed to an abstract idea does not automatically become eligible by adding a mathematical formula."  Furthermore, the Federal Circuit pointed out that the claims did not even require a computer; the claimed method could be practiced verbally or with a telephone.

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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