Federal Circuit Review - October 2020

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Expiration of a Patent Does Not Always Trigger Application of Phillips Standard on IPR Appeal

In Immunex Corporation v. Sanofi-Aventis U.S. LLC, Appeal No. 19-1749, the Federal Circuit held that expiration of a patent during appeal from IPR does not trigger claim construction under the Phillips standard when the expiration was caused by litigant’s filing of terminal disclaimer and the IPR was filed before the Phillips standard applied in all IPRs.

Sanofi filed petitions for inter partes review of a patent owned by Immunex. The patent at issue described a “human antibody” for binding to interleukin receptors. Under the broadest reasonable interpretation (“BRI”) standard, the PTAB found that the term “human antibody” included “humanized” antibodies, or antibodies comprising some regions derived from non-human origins. Based on that interpretation, the PTAB invalidated the claims over the cited prior art.

The Federal Circuit acknowledged that today, in all newly filed IPRs, the Board applies the Phillips standard. However, when Sanofi filed its IPRs, the Board only applied this standard to expired patents and applied the BRI standard to unexpired patents. After the parties filed appellate briefs, Immunex filed a terminal disclaimer of its patent, and subsequently, the patent expired before the Federal Circuit heard oral argument. Immunex argued, on appeal, that because the patent had expired, the court should construe the terms under the Phillips standard rather than the BRI standard. Though the Federal Circuit acknowledged that it had applied the Phillips standard when a patent expired on appeal, the court distinguished the present case because the patent term was unexpectedly cut short by Immunex’s terminal disclaimer after the appellate briefing. Construing “human antibody” under the BRI standard, the court affirmed the PTAB’s finding of invalidity.

The Federal Circuit Interprets Claims in Light of the Specification to Revive Heart Valve Patent

In St. Jude Medical, LLC v. Snyders Heart Valve LLC, Appeal No. 19-2108, the Federal Circuit held that even the broadest reasonable interpretation of a claim must be determined in light of the specification.

St. Jude Medical, LLC (“St. Jude”) filed two petitions for inter partes review of a patent owned by Snyders Heart Valve LLC (“Snyders”). The patent described and claimed an artificial heart valve and a system for inserting the valve, which can be installed via catheter without invasive surgery and “without removing [a] damaged native heart valve.” In the first IPR, the Board found that the patent claims were not anticipated by the prior art. In the second IPR, the Board found that four of the claims were anticipated by the prior art, but found the rest of the claims patentable.

In finding four of the claims anticipated, the Board applied the “broadest reasonable interpretation” of the Snyders patent claim limitation requiring a “frame sized and shaped for insertion between the upstream region and the downstream region.” The key prior art also disclosed a valve insert, which was sized to fit the valve after the damaged native valve was removed. The Board broadly interpreted “frame sized and shaped” as also covering a frame that fits in place after removal of a damaged heart valve. Therefore, the Board found that the prior art anticipated the claims.

The Federal Circuit reversed the Board’s anticipation finding. The Federal Circuit noted that the prior art required removal of a damaged native heart valve before installation of the artificial valve. In contrast, the Snyders patent specification stressed that the disclosed artificial heart valve can be inserted without removing the native valve — an express improvement on the prior art. The Federal Circuit found that such language in the specification made it unreasonable for the Board to read the “sized and shaped” limitation as covering an artificial valve fitted for the space left after removing the native valve. Reading the Snyders claim limitation in light of the spec, the Federal Circuit held that none of the claims in the Snyders patent were anticipated by the prior art.

Reasonable or Not, Make Sure You Don’t Believe You Infringe

In Tecsec, Inc., v. Adobe Inc., Appeal No. 19-2192, the Federal Circuit held that, even if it would be objectively reasonable to view a defendant’s conduct as noninfringing, the intent element of induced infringement may still be established through the defendant’s subjective beliefs.

TecSec alleged that Adobe directly infringed and induced third parties to infringe TecSec’s patents. Under an initial claim construction order by the district court, TecSec and Adobe stipulated that Adobe did not infringe. The Federal Circuit reversed that initial claim construction but did so just two weeks before TecSec’s patents expired. Adobe argued that the parties’ stipulation of noninfringement prevented it from possessing the requisite intent to induce infringement, and Adobe moved in limine to exclude from trial all evidence of induced infringement after the date of that stipulation. The district court granted that motion in limine. At trial, the jury found direct infringement but no induced infringement, and it awarded TecSec $1.75 million in damages. The district court vacated the jury’s damage award, reasoning that TecSec’s only relevant damages evidence related to sales that the court had previously determined did not alone constitute direct infringement. TecSec appealed.

On appeal, TecSec challenged the district court’s order excluding all evidence of induced infringement after the date the parties had stipulated to noninfringement. Adobe argued that the district court’s initial claim construction order was reasonable and thus, as a matter of law, Adobe could not have had the specific intent required to establish induced infringement. The Federal Circuit disagreed, reasoning that the requisite intent could be based on the subjective bad faith of the infringer, even if it would have been objectively reasonable to view the conduct as noninfringing. Adobe could still have had the required intent, for example, if it subjectively believed that the district court’s initial claim construction was incorrect. The Federal Circuit further held that excluding the entire issue of induced infringement from trial was not properly decided on Adobe’s motion in limine, which did not call or provide for consideration of all relevant evidence, as on a motion for summary judgment. The Federal Circuit therefore reversed in relevant part and remanded for further proceedings on TecSec’s claim of induced infringement.

District Court Ordered to Take a Second Look at the First-To-File Rule

In In Re: Nitro Fluids, Appeal No. 20-142, the Federal Circuit held that the balance of transfer factors must favor keeping a case in a second-filed court in order to justify an exception to the first-to-file rule.

Cameron filed a patent infringement suit against Nitro in the Southern District of Texas concerning fracking technology. Two years later, Cameron filed a second infringement suit on the same accused products in the Western District of Texas asserting additional patents from the same patent family. Nitro asked the Western District of Texas to decline jurisdiction or transfer the case to Southern District of Texas. Nitro invoked the first-to-file rule, which generally dictates that a dispute raised in multiple courts should be decided in the first-filed case. The Western District of Texas did not apply the first-to-file rule and denied the motion. The court’s rejection of the first-to-file rule rested on the legal proposition that the rule is only applicable when the balance of the 28 U.S.C. § 1404(a) transfer factors favors the first-filed court. The Western District of Texas found that, because a balance of the transfer factors did not weigh in favor of transfer, compelling circumstances existed to avoid application of the first-to-file rule. Nitro then filed a mandamus petition.

On appeal, the Federal Circuit found that the district court’s reasoning was backwards. It held that the first-to-file rule is applicable unless the balance of transfer factors favors making an exception to the rule and keeping the case in the second-filed court. Upon reviewing the district court’s finding that two factors favored the first court, two favored the second court, and the remainder were neutral, the Federal Circuit criticized the depth of the district court’s analysis. It also indicated that additional proceedings were needed to address errors in assessing the two factors favoring the second court and the lynchpin of the district court’s analysis—its purported ability to hear the case quicker. In vacating the district court’s order, the Federal Circuit instructed the district court to reconsider the transfer factors in view of the availability of multi-district procedures and whether keeping the case in the second-filed court would impermissibly thwart the first-to-file rule.

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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