Federal Circuit Review - April 2019

Knobbe Martens

Knobbe Martens

Just Because Something May Result From a Prior Art Teaching Does Not Make it Inherent in that Teaching

In Personal Web Technologies, LLC v. Apple, Inc., Appeal No. 2018-1599, the Federal Circuit clarified that the mere fact that a certain thing may result from a given set of circumstances is not sufficient to demonstrate inherency.  Instead, the party alleging inherency must show that the natural result flowing from the operation, as taught, would result in the performance of the questioned function.

Apple filed a petition requesting inter partes review of a Personal Web patent, alleging the patent was obvious in view of two prior art references.  The patent claimed a method and apparatus for avoiding problems which arise from traditional naming protocols in conventional data processing systems, such as duplication of a data item.  The PTAB found the claims obvious, in part because one of the prior art references inherently taught a claim limitation.

The Federal Circuit reversed the Board’s decision, concluding that the inherency finding lacked substantial evidence.  While it was possible that the prior art system utilized the claim limitation at issue, Personal Web suggested an equally plausible understanding of the prior art that would not utilize the limitation at issue.  The Federal Circuit noted that inherency may not be established by probabilities or possibilities, but instead must necessarily exist in the prior art.  Because the disputed claim limitation did not necessarily exist in the prior art, the Board’s reliance on inherency in its obviousness analysis was improper.

Navigating Treatment Claims Through An Eligibility Challenge at the Pleading Stage

In Natural Alternatives Int’l, Inc. v. Creative Compounds, LLC, Appeal No. 2018-1295, the district court improperly held that claims were directed to a natural law where the claims recited a method of treatment requiring a specific and allegedly unconventional dosage of the naturally occurring ingredient.

Natural Alternatives asserted several dietary supplement patents related to using beta-alanine, a naturally occurring product, to “increas[e] the anaerobic working capacity of muscle and other tissues.”  Creative Compounds moved for judgment on the pleadings, alleging ineligibility under 35 U.S.C. § 101.  The district court granted Creative’s motion, holding that even under the patentee’s proposed claim constructions, the claims were directed to a natural law and thus were ineligible for patenting.  

The Federal Circuit reversed and remanded, stating that, under the patentee’s proposed claim construction, the claims at issue “are treatment claims and as such they are patent eligible.”  The Federal Circuit found that although beta-alanine is a natural product, the claims were not directed to beta-alanine.  Instead, the claims were directed to “specific treatment formulations that incorporate natural products,” where those natural products “have different characteristics and can be used in a manner that beta-alanine, as it appears in nature, cannot.”

The court cited Vanda Pharmaceuticals Inc. v. West-Ward Pharmaceuticals International Ltd., 887 F.3d 1117, 1134–36 (Fed. Cir. 2018), to support its analysis of treatment claims under the Mayo/Alice two-step framework.  Vanda contrasted patent-eligible treatment claims from the diagnostic claims found ineligible in Mayo.  Applying Vanda, the court found that Natural Alternatives’ claims were “treatment claims” because the claims as construed “require that an infringer actually administer the dosage form claimed in the manner claimed.”  Thus, the court found that the claims were patent-eligible at Mayo/Alice step one.

The court also stated that “at step two, factual impediments exist” to invalidating the claims at the pleading stage.  Under Natural Alternatives’ constructions, the claims allegedly required a dietary supplement with “a dose well in excess of the normal levels of beta-alanine.”  The court found no basis to conclude that this dietary supplement limitation was well-understood, routine, and conventional at Mayo/Alice step two.

Judge Reyna, writing separately, disagreed with the claim construction the majority relied upon to find the claims patent-eligible, but concurred in the majority’s decision to remand for further proceedings.  Believing that the district court afforded too much deference to the patentee’s proposed claim construction, Judge Reyna questioned whether “a Rule 12(c) motion based on § 101 should be decided before claim construction,” and suggested that district courts should be asked to independently construe claims before deciding § 101 issues.

Claims Drawn to Improving the Functionality of Computers and Computer Networks Themselves May Be Patent Eligible under Step One of Alice

In SRI International, Inc. v. Cisco Systems, Inc, Appeal No. 2017-2223, the Federal Circuit held that the challenged claim was not directed to an abstract idea because the claim was more complex than merely reciting the performance of a known business practice on the Internet.

SRI sued Cisco for infringement of two of SRI’s network surveillance patents.  Cisco moved for summary judgement on various issues, including that the claims are drawn to patent-ineligible subject matter.  The district court denied summary judgment of ineligibility.  A jury found that Cisco willfully infringed the patents.  Cisco appealed the district court’s denial of summary judgment of patent ineligibility under 35 U.S.C. § 101, the denial of its motion for judgment as a matter of law that it did not willfully infringe the patents, and other issues.

The Federal Circuit affirmed the district court’s finding that the claims are subject-matter eligible under step one of Alice because they were not directed to an abstract idea.  The Federal Circuit found that the claims used a specific technique to solve a technological problem arising in computer networks, namely identifying hackers or potential intruders into a network by using a plurality of network monitors to analyze data on the network and integrate reports from the monitors.  The Federal Circuit cited the specification to support its conclusion that the claims were directed to a technological solution to a technological problem.  On appeal, Cisco argued that the claims were analogous to the ineligible claims in Electric Power Group, LLC v. Alstom S.A., as they were merely directed to generic steps required to collect and analyze data.  The Federal Circuit distinguished Electric Power, stating that those “claims were drawn to using computers as tools to solve a power grid problem,” whereas the claims at issue here were drawn to “improving the functionality of computers and computer networks themselves.”

With respect to willful infringement, the Federal Circuit agreed with Cisco that the jury’s finding of willful infringement going back to 2000 was not supported by substantial evidence.  Cisco did not know of the patents until May 2012 when it received a notice letter.  The Federal Circuit vacated and remanded for the district court to determine if substantial evidence supported willful infringement from 2012.

Judge Lourie dissented, arguing that, under step one of Alice, the claims were directed to the abstract idea of monitoring network security.  At step two, Judge Lourie found no inventive concept because the claims were result-focused without claiming a specific way to monitor network activity.

Demonstrating Diligence in Reducing an Invention to Practice Only Requires Showing the Diligence Was Reasonably Continuous, Not Perfectly Continuous

In Arctic Cat Inc. v. GEP Power Products, Inc., Appeal Nos. 2018-1520, 2018-1521, the Federal Circuit held that the preamble of several challenged claims was not limiting because the preamble merely identified an intended use, and did not impose a structural requirement.  The Federal Circuit also held that the inventor was diligent in reducing his invention. 

GEP filed petitions requesting inter partes review of two patents owned by Arctic Cat. The patents at issue described an electrical-connection box for distributing power to various electrical components. The Board granted the petitions and found both patents unpatentable.  Arctic Cat challenged the Board’s findings that various claim preambles were not limiting and that the Boyd patent was prior art.  

The preamble in the patents at issue recited “[a] personal recreational vehicle.”  The Court agreed with the Board that the reference to “personal recreational vehicle” merely identified an intended use.  Further, Arctic Cat did not show that this use imposed any structural requirement on the claimed module.  A preamble is not limiting where a patentee describes a structurally complete invention in the claim body and uses the preamble only to state an intended use.  In addition, Arctic Cat did not use the transitional phrase “wherein the improvement comprises.”  Thus, the Court agreed with the Board that the preamble did not limit the claims in the patents at issue.  

The Federal Circuit reversed the Board’s decision that the Boyd patent was prior art to the patents at issue.  Boyd was filed about seven months before the filing date of the first patent at issue, to which the second patent at issue claimed priority.  Antedating Boyd required that the inventor conceive of the invention before the filing date of Boyd and diligently reduce the invention to practice. The parties did not dispute that the inventor conceived the invention prior to the filing date of Boyd. Thus, the only issue was whether the inventor had been diligent in reducing the invention to practice.  The Federal Circuit noted that diligence “need not be perfectly continuous – only reasonably continuous.”  The Court stated that the Board applied too rigid of a standard for diligence. The inventor submitted a declaration that included a timeline with citations to exhibits to demonstrate his efforts. The Federal Circuit noted that the gaps in the activity described in the timeline were explained by the testing of the inventions by another party.

Drug Treatment Claims Found to be Patent-Eligible

In Endo Pharmaceuticals Inc. v. Teva Pharmaceuticals USA, Inc., Appeal Nos. 2017-1240, -1455, -1887, the Federal Circuit held that claims directed to a specific method of treatment for specific patients using a specific compound at specific doses to achieve a specific outcome may be patent eligible, despite using a natural law or phenomenon.  

Endo sued Actavis Pharma and Teva alleging infringement of a patent (’737 Patent) covering a method of using oxymorphone to treat pain in patients with impaired kidney function.  In response, Actavis moved to dismiss Endo’s patent infringement claims under § 101.  The magistrate judge recommended granting Actavis’s motion, reasoning that the claims were directed to a natural law under the Alice/Mayo framework.  The district court adopted the magistrate judge’s recommendation and entered partial judgment of ineligibility in the Actavis case and final judgment of ineligibility in the Teva case.  Endo appealed.

The Federal Circuit, reviewing the grant of the motion to dismiss and the patent eligibility determination de novo, reversed after finding the claims to be directed to a patent-eligible method of using oxymorphone to treat pain in a renally impaired patient.  The Federal Circuit found that the claims, like those in Vanda Pharmaceuticals Inc. v. West-Ward Pharmaceuticals International Ltd, 887 F.3d 1117 (Fed. Cir. 2018), recited a method for treating a patient comprising carrying out a dosage regimen based on the results of some form of testing.  Additionally, the claims required specific treatment steps, such as requiring doctors to orally administer the drug to a patient at a lower dosage based on the measured test results in such a way that the concentration of the drug over time did not exceed a recited level in the patient’s body.  Thus, the claims were directed to a specific method of treatment for specific patients using a specific compound at specific doses to achieve a specific outcome.

The Federal Circuit distinguished Mayo because the claims in that case were directed to the relationship between the dosage of a drug and a particular condition, while the ’737 claims were directed to an application of that relationship, specifically, a method of treatment including specific steps to adjust the dosage for patients with the condition.  

Thus, the Federal Circuit found that the claims were patent-eligible and reversed the district court’s decision.

An Abstract Idea Cannot Supply an Inventive Concept for Alice Step Two

In Chargepoint, Inc. v. Semaconnect, Inc., Appeal No. 2018-1739, the Federal Circuit held that an abstract idea cannot be used to supply an inventive concept that renders a claim “significantly more” than an abstract idea. 

ChargePoint filed a complaint for patent infringement against SemaConnect, asserting four patents relating to networked electric-vehicle charging stations connected to a local power grid.  In response to the complaint, SemaConnect filed a motion to dismiss based on 35 U.S.C. § 101.  The district court granted SemaConnect’s motion to dismiss, holding that the asserted patent claims were directed to ineligible subject matter and dismissed the case with prejudice.  ChargePoint appealed. 

The Federal Circuit affirmed after employing the two-step Mayo/Alice analysis.  At step one, the Federal Circuit determined that the asserted claims were directed to the abstract idea of communication over a network for interacting with a device, applied to the context of electric-vehicle charging stations, and that the claims would preempt the entire industry’s ability to use networked charging stations.  At step two, ChargePoint argued that its network-controlled charging stations provided an unconventional solution to technological problems in the field and thus contained an inventive concept that rendered the claims “significantly more” than an abstract idea.  However, the Federal Circuit held that the alleged inventive concept, network control, was an abstract idea itself and thus could not be used to supply the inventive concept.

The Federal Circuit also found no error in the district court’s decision to dismiss ChargePoint’s complaint with prejudice because, amongst other things, ChargePoint never sought leave to amend pre-judgment, never filed a proposed amended complaint, and failed to identify any alleged facts that could be pleaded to cure the deficiencies in its complaint. 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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