A recent opinion from the District of New Jersey is a cautionary tale for patent practitioners regarding conduct during patent prosecution that can be framed as bad faith. This can become an expensive misstep during subsequent litigation. In Howmedica Osteonics Corp. v. Zimmer, Inc. et al., 2-05-cv-00897, the court granted defendant Zimmer, Inc.’s (“Zimmer”) motion for over $13 million in attorney fees and costs under 35 U.S.C. § 285 over plaintiff Howmedica Osteonics Corp.’s (“Howmedica”) argument that its actions did not support a finding of an exceptional case.
The Court of Appeals for the Federal Circuit ruled in February that it was wrong for a judge to rule that a patent was ineligible under the Alice standard because there were underlying factual disputes that could not be resolved on summary judgement. The case is Berkheimer v. HP Inc., case number 17-1437, in the U.S. Court of Appeals for the Federal Circuit.
On Monday, November 27, 2017, the Supreme Court heard oral arguments in SAS Institute v. Matal.
Whether 35 U.S.C. § 318(a) requires that the Patent Trial and Appeal Board (PTAB or Board) issue a final written decision as to every claim challenged by a petitioner, or does it allow the Board to issue a final written decision with respect to the patentability of only some of the patent claims challenged by the petitioner.
On September 14, 2012, ComplementSoft sued SAS in the Northern District of Illinois for infringement of U.S. Patent No. 7,110,936. On March 29, 2013, SAS filed a petition with the PTAB for inter partes review (IPR) of the ‘936 Patent, challenging patentability of all 16 claims of that patent. The PTAB instituted IPR as to 9 claims (1 and 3-10) of the ‘936 patent and on August 6, 2014 issued a final written decision under 35 U.S.C. § 318(a), holding that claim 4 was not invalid over prior art, whereas claims 1-3 and 5-10 were unpatentable. SAS’ request for rehearing before the Board was denied. On June 10, 2016, the 2-1 divided Panel of the Federal Circuit Rejected SAS’s argument that the Board must address all claims challenged in an IPR petition in its final written decision, and affirmed the PTAB’s decision, except vacated with respect to claim 4. The Panel consisted of Judges Stoll, Chen, and Newman, with Judge Newman dissenting in part. As Judge Stoll stated, there is “no statutory requirement that the Board’s final decision address every claim raised in a petition for inter partes review. Section 318(a) only requires the Board to address claims as to which review was granted.” The Federal Circuit reasoned that 35 U.S.C. § 314 and 35 U.S.C. § 318(a) are different and that § 318(a) “does not foreclose the claim-by-claim approach the Board adopted [in Synopsys] and in this case.” In a dissenting opinion, Judge Newman stated that 35 U.S.C. § 314(a) required USPTO either refuse to institute IPR entirely, or to review all challenged claims when “there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.”
On November 21st, the PTAB issued guidance on motions to amend based on the Federal Circuit’s en banc decision in Aqua Products, Inc. v. Matal, 872 F.3d 1290 (Fed. Cir. 2017). In view of the Aqua Products decision, the PTAB will not place the burden of persuasion on the patent owner with respect to the patentability of substitute claims presented in a motion to amend. Instead, after the patent owner files a motion to amend, the Board will determine whether the substitute claims are unpatentable by a preponderance of the evidence based on the entirety of the record, including the opposition by the petitioner.
In Vecco Instruments Inc. v. SGL Carbon, LLC, No. 17-CV-2217 (E.D.N.Y. Nov. 2, 2017), Judge Pamela Chen in the Eastern District of New York recently granted Vecco’s motion for a preliminary injunction enjoining SGL Carbon. The requested injunction sought to prevent SGL Carbon’s further actions related to its likely indirect infringement of Vecco’s asserted patents. Notable in this extensive and detailed 76-page decision is the Court’s discussion of how “long-term and second-order” effects of the accused infringer’s actions can satisfy the “irreparable harm” requirement of the preliminary injunction analysis.
Plaintiff Vecco designs, manufactures, and services LEDs, power electronics, hard drives, and other electronic devices. It also owns patents related to metal-organic chemical vapor deposition (MOCVD) reactors, a technology that enables high-volume fabrication of metal-organic semiconductor wafers that can be turned into LEDs. Vecco enjoys a large share of the MOCVD market due, in large part, to a distinctive feature of its MOCVD reactors: a removable wafer carrier, typically made of graphite that is mounted on a spindle centrally positioned within the reactor. Vecco authorized SGL Carbon to manufacture these wafer carriers for Vecco and its customers, but in 2013, SGL Carbon began manufacturing wafer carrier for a new entrant into the MOCVD market. Vecco claims this constituted infringement of its MOCVD patents, and sought a preliminary injunction to stop this activity during the pendency of the patent litigation case.
In a precedential opinion issued on October 11, 2017, the United States Court of Appeals for the Federal Circuit reversed the Patent Trial and Appeals Board’s (“PTAB”) finding of non-obviousness where the prior art taught away from some, but not all, of the embodiments covered by the challenged claims. In Owens Corning v. Fast Felt Corp., No. 2016-2613 (Fed. Cir. Oct. 11, 2017), the panel held that the PTAB had applied an unreasonably narrow construction to the exclusion of embodiments that were not taught away from by prior combinations disclosing all of the claim elements.
PTAB’s Improper Claim Construction
Fast Felt owns U.S. Patent No. 8,137,757 (“the ‘757 patent”), which it asserted against Owens Corning in the U.S. District Court for the Northern District of Ohio. In turn, Owens Corning petitioned for inter partes review of the claims of ‘757 patent, and the PTAB instituted trial. Owens Corning contended that the challenged claims were rendered obvious by prior art combinations disclosing all elements of the independent claims. However, in its final written decision, the Board determined that Owens Corning failed to provide a motivation to combine and upheld the patentability of the challenged claims. Owens Corning timely appealed.
The United States Court of Appeals for the Federal Circuit’s recent decision in Aqua Products Inc., v. Matal materially changes the burden of proof associated with the patentability of amended claims during an inter partes review (“IPR”), shifting the burden from the Patent Owner seeking the amendment to the IPR Petitioner opposing it.
Prior to the Aqua decision, if a Patent Owner sought to amend claims during an IPR, the Patent Trial and Appeals Board (the “Board”) placed the burden on the Patent Owner to prove that the proposed amended claims were patentable. When Patent Owner Aqua attempted to amend its claims during an IPR challenge to its U.S. Patent No. 8,273,183, the Board found that Aqua had not met its burden and denied Aqua’s motion to amend.
The Federal Circuit yesterday issued an opinion in In re: Smith Int’l, Inc., No. 2016-2303 (Fed. Cir. Sept. 26, 2017) reversing an affirmance by the Patent Trial and Appeal Board of the rejection of several claims of U.S. Patent No. 6,732,817 being challenged in ex parte reexamination. In so doing, the Court held the Board’s construction of “body” in the ’817 Patent claims to be unreasonable as inconsistent with the specification.
The ’817 Patent concerns a downhole drilling tool for oil and gas operations. In affirming the examiner, the Board found it “perfectly reasonable” to interpret the “body” of the tool as encompassing other components because neither the claims nor the specification explicitly limit the scope of the term. Even though the specification describes the body as separate from other elements, the Board reasoned that it doesn’t expressly define “body” or otherwise preclude the examiner’s interpretation. But according to Smith, the ’817 Patent consistently refers to and depicts the body as a component distinct from other components of the drilling tool – like the “mandrel” or “piston” located inside the drilling tool – and should be interpreted simply as an “outer housing.”
After an eight-year battle through the Federal Courts, the fight over attorneys’ fees in Octane Fitness v. ICON Health & Fitness has likely reached its end with the Federal Circuit upholding the hotly disputed $1.6 million award to Defendant Octane Fitness. This case previously made it up to the Supreme Court, which overturned the Federal Circuit’s prior standard for determining exceptional cases under 35 U.S.C. § 285. Following a remand to the District Court applying the new totality-of-the-circumstances test established by the Supreme Court, the parties again appealed to the Federal Circuit.
Last week, the Federal Circuit held computer memory system patent claims not abstract and thus patent-eligible under Section 101, reversing a lower court dismissal of the case under Rule 12(b)(6). Visual Memory LLC v. NVIDIA Corp., No. 2016-2254, 2017 U.S. App. LEXIS 15187 (Fed. Cir. Aug. 15, 2017).
U.S. Patent No. 5,953,740 (“the ‘740 patent”) describes a memory system that can be tailored for use with multiple different processors without reducing performance. Id. at 3. The ‘740 patent explains that when “the [memory] system is turned on, information about the type of processor is used to self-configure the programmable operational characteristics.” Visual Memory, No. 2016-2254, slip op. at 4. “For example, depending on the type of processor, internal cache 16 can store both code and noncode data, or it can store only code data.” Id. at 4. Claim 1 recites the following: