Federal Circuit Review | October 2016

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Withdrawal of Claims During Prosecution Can Trigger Prosecution History Estoppel

In UCB, Inc. v. Yeda Research and Development Co., Ltd., Appeal No. 2015-1957, the Federal Circuit held that prosecution estoppel can apply even absent narrowing of a particular proposed claim. 

While generic claim terms are construed in light of what is known in the art, the Federal Circuit held that a patent applicant cannot later obtain claims to subject matter that was requested during prosecution, rejected by the Examiner, and then withdrawn by the applicant.  The Federal Circuit agreed with the district court’s claim construction, which narrowed the scope of a generic term to specific species from the specification, because the applicant had withdrawn claims directed to additional species during prosecution.


Willfulness Does Not Necessarily Mean That a Case Is Exceptional

In Stryker Corporation v. Zimmer, Inc., Appeal No. 2013-1668, the Federal Circuit held that a finding of enhanced damages and attorneys’ fees for willfulness under Seagate does not necessarily justify enhanced damages and fees for willfulness under Halo.

The Supreme Court decided Halo and Stryker together, overruling Seagate and the then-controlling law for willful patent infringement and enhanced damages. The Seagate test for willful infringement had required clear and convincing evidence, both that the accused infringer was objectively reckless and that the accused infringer knew or should have known of the risk of infringement. In Halo and Stryker, the Supreme Court held that subjective willfulness alone can warrant enhanced damages without regard to objective recklessness and rejected the clear and convincing evidence standard in favor of a preponderance of the evidence standard. 

On remand in this case, the Federal Circuit affirmed the jury’s finding of subjective willful infringement, reasoning that willfulness determined under the higher clear and convincing standard was sufficient to establish willfulness under the lesser preponderance standard. But, the Federal Circuit vacated the award of enhanced damages and remanded to the district court for reconsideration under Halo, which permits an award of enhanced damages at the district court’s discretion based on the circumstances of the case. The Federal Circuit also vacated and remanded the award of attorneys’ fees that had been awarded solely based on the willful infringement finding. A finding of willfulness does not necessarily render a case exceptional. Under Octane Fitness, the exceptional nature of a case is decided on a case-by-case basis at the court’s discretion considering the totality of the circumstances.


Software Claims Contained Limitations That Rendered Them Patent Eligible

In McRO, Inc. v. Bandai Namco Games America, Appeal Nos. 2015-1080, -1081, -1082, -1083, -1084, -1085, -1086, -1087, -1088, -1089, -1090, -1092, -1093, -1094, -1095, -1096, -1097, -1098, -1099, -1100, -1101, the Federal Circuit reversed the district court’s finding that claims directed to the automation of lip synchronization and facial expression in three-dimensional animated characters were invalid under §101.

Plaintiff McRO, Inc. sued multiple defendants for infringement of two patents claiming methods for automatically animating the lip synchronizing and facial expressions of three-dimensional characters. The defendants moved for judgment on the pleadings and the district court found the asserted claims invalid as being directed to patent-ineligible subject matter under §101.

On appeal, the Federal Circuit reversed, holding that the claimed methods were not directed to an abstract idea. Contrary to the defendants’ argument, the claims were not so broad as to encompass the entire concept of automating lip synchronization for animated characters. While the claims broadly encompass using an unspecified set of rules to define the output for the facial expression of a character, the failure to claim a specific set of rules did not make the claims abstract. The Federal Circuit explained that the claimed rules included certain limitations, such as having to be rendered in a certain way, making them more akin to a genus claim which is not necessarily unpatentable. Accordingly, the claims were held to be patent eligible and the Federal Circuit did not address step two of the Alice test.


The Federal Circuit Reiterates That Obviousness Entails a Flexible Analysis

In ClassCo, Inc. v. Apple, Inc., Appeal No. 2015-1853, the Federal Circuit affirmed the Board’s conclusion of obviousness.

The Federal Circuit rejected ClassCo’s argument that, under KSR International Co. v. Teleflex Inc., 550 U.S. 398 (2007), a combination of references is obvious only if it unites old elements without changing their respective functions.  Rather, KSR instructs that the obviousness analysis requires a “flexible approach,” recognizing that familiar items may have obvious uses beyond their primary purposes.

The Federal Circuit also found that the Board erred in giving no weight to ClassCo’s evidence of praise and commercial success. ClassCo’s evidence of praise related to features that were not available in the prior art but were within the scope of the claims. Further, ClassCo’s marketed product embodied the claimed features, and therefore its commercial success is of some weight.  But the Federal Circuit found no error in the Board’s ultimate conclusion because ClassCo’s evidence of secondary considerations was not strong enough to overcome the prior art under the first three Graham factors.


The Federal Circuit Announces a New Test for the Reviewability of PTAB Decisions to  Institute an IPR

In Husky Injection Molding Systems Ltd. v. Athena Automation Ltd., Appeal Nos. 2015-1726, -1727, the Federal Circuit announced a test to determine when it can review a challenge to a decision to institute a post-grant proceeding.

First, the Federal Circuit must determine whether the challenge is “closely tied” to the application or interpretation of statutes related to the decision to institute, or if it instead relates to constitutional questions, other less closely related statutes, or other questions that reach beyond the section of the statute related to instituting post-grant proceedings.  If the latter, the Federal Circuit can review the decision. If the former, the Federal Circuit can only review the decision if it “is directed to the Board’s ultimate invalidation authority with respect to a specific patent.” 

Husky’s former president, a co-inventor of the patent at issue, assigned his rights in the patent to Husky and then left to form Athena. Athena later challenged the patent with a petition for IPR. Husky argued that assignor estoppel barred Athena from filing the petition.  The Board rejected this argument and instituted review, arguing that 35 U.S.C. § 311 allowed anyone who is not the owner of a patent to file an IPR. The Board’s final written decision found some claims unpatentable.  Husky appealed the decision to institute.

Applying a newly enunciated test for determining when the Federal Circuit can review a challenge to an institution decision, the Federal Circuit concluded that the Board’s decision that assignor estoppel did not prevent the filing of IPRs was too closely related to the statutes governing institution of IPRs for the Federal Circuit to review.  Judge Plager dissented from this portion of the decision, arguing that either § 311 is not closely related to the statutes governing decisions to institute or the question exceeded the scope of the section of the statutes related to institution.

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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