Latest Federal Court Cases - April 2020 #2

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PATENT CASE OF THE WEEK

BASF Corporation v. SNF Holding Company, Appeal No. 2019-1243 (Fed. Cir. April 8, 2020)

This week’s case of the week concerns issues relating to the “known or used by others in this country,” on sale, and public-use bars under Section 102. Interpreting Supreme Court precedent dating back 150 years, the Court concluded that use by a third party in this case was not anticipatory.

The patent, owned by BASF, involved processes for preparing certain polymers. At issue was the “Sanwet” process used by a third party, Celanese Corporation, prior to the patent’s priority dates, which allegedly performed all elements of the patented process. The Sanwet process was developed in Japan by Sanyo. In 1985, Sanyo licensed the technology to Celanese for use in the United States. Sanyo also provided Celanese with substantial technical information and sent technical personnel to assist Celanese in the United States. But Celanese was obligated to keep information about the process confidential.

The district court granted summary judgment of invalidity pursuant to Section 102(b), finding that “one person’s use or knowledge” is all that is required for an invention to be “known or used” by others under § 102(a), and “whether prior use is secret or confidential is immaterial.” Because Celanese knew about the process in the United States, the Court held the technology was subject to the “known or used by others in this country” bar under Section 102(a). The district court also held the patent invalid under Section 102(b) pursuant to the “on sale” and “public use” bars. For the “on sale” bars, the Court relied on the license agreement combined with the technical information and in person operations assistance provided by Sanyo, because “the transmission of the process description to a user with the ability to perform the process constitutes putting the process ‘on-sale.’”

The Federal Circuit reversed. With respect to prior knowledge or use by others, the Court provided an extensive analysis and reconciliation of two different concepts. First, there is the concept that a single person’s knowledge or use is sufficient to find a patent anticipated. Second, there is the concept that secret knowledge or use is insufficient. Tracing these two different doctrinal trails through cases back to the 1820s, the Federal Circuit concluded that the “known or used” prong of § 102(a) means “knowledge or use which is accessible to the public.” The Sanwet process, which was subject to confidentiality provisions, was not accessible to the public, and was therefore not qualifying prior art under Section 102(a).

With respect to public use, the Court found the facts insufficient to warrant summary judgment of public use. Again tracing through cases dating back to the nineteenth century, the Court explained that public use must be use that is “not purposely hidden.” The Court rejected SNF’s assertion that Celanese’s use of the process in the United States was per se public use. And although tours were offered of the Celanese plant where the process was used, there was no evidence that the public could observe every step of the Sanwet process at that plant, or even enough to re-create the invention. The Court held that there were genuine issues of material fact on this issue, and remanded for trial concerning those facts.

Finally, the Court rejected the district court’s application of the on sale bar under Section 102(b). The Court reasoned that “[t]he invention itself must be sold or offered for sale, and the mere existence of a commercial benefit … is not enough to trigger the on-sale bar on its own.” The Court addressed the question of when a “process” may be subject to a sale sufficient to invoke Section 102(b). Relying on In re Kollar, 286 F.3d 1326 (Fed. Cir. 2002), the Court concluded that the license from Sanyo to Celanese was not a “sale” of the patented technology: “the grant of a license to practice a patented invention, with or without accompanying technical information, does not itself create an on-sale bar.” The Court also rejected an alternative argument that the sale of Celanese to a subsequent company did not constitute a “sale” of the invention. “For a typical acquisition such as this, the purchase of a company is not, under the patent law, tantamount to a purchase, or in inverse terms a sale, of every asset held by the acquired company.”

On each basis, the Court reversed, remanding the case for trial. 

The opinion can be found here.

ALSO THIS WEEK

Bozeman Financial LLC v. Federal Reserve Bank of Atlanta, Appeal Nos. 2019-1018, -1020 (Fed. Cir. April 10, 2020)

In this appeal from a covered business method (“CBM”) review by the Patent Trial and Appeal Board (“PTAB”), the Federal Circuit addresses who may be considered a “person” under the America Invents Act (“AIA”), and issues relating to patent eligibility under Section 101 in connection with a CBM review. The Court first narrowly held that the Federal Reserve Banks (“the Banks”) that petitioned for CBM review are “persons” under the AIA, despite their being members of the nation’s Federal Reserve System, because the Banks are not part of any government agency, but rather are corporate entities subject to suit for patent infringement in any court. The Court also affirmed the PTAB’s decision that the patents-in-suit, which were simply directed to verifying financial documents to reduce transactional fraud, were directed to abstract ideas and thus not patent eligible.

The opinion can be found here.

Nike, Inc. v. Adidas AG, Appeal No. 2019-1262 (Fed. Cir. April 9, 2020)

In an appeal from the Board’s decision of obviousness in an inter partes review, the Court reviewed whether the Board is permitted to base its decision of obviousness on arguments that were not advanced by a party. The Court held that, because this case involves a motion to amend with a substitute claim, the Board should not be constrained to arguments and theories raised by the petitioner. Otherwise, were a petitioner not to oppose a motion to amend, the Patent Office would be left with no ability to examine the substitute claims.

Although the Board was permitted to raise the new patentability theory, the notice provisions of the APA and case law require that the Board provide notice and an opportunity for the parties to respond before issuing a final decision relying on the new patentability theory. The Board did not provide patentee with this notice and opportunity, so the Court vacated the Board’s decision as to the substitute claim and remanded for the Board to determine whether the substitute claim is unpatentable as obvious after providing the parties with an opportunity to respond.

The opinion can be found here.

Nevro Corp. v. Boston Scientific Corp., Appeal Nos. 2018-2220, -2349 (Fed. Cir. April 9, 2020) 

In this appeal from the United States District Court for the Northern District of California, the Federal Circuit addresses issues relating to indefiniteness under 35 U.S.C. § 112. The Court held that the district court used incorrect legal standards in its indefiniteness analysis. The district court found certain claim terms indefinite because whether the claim as written was infringed could only be determined on a case-by-case basis. The Court explained that definiteness does not require that a potential infringer be able to predict whether a particular act infringes the claims. Nor is a claim indefinite merely because it is subject to different interpretations. Rather, indefiniteness is analyzed by determining whether a claim as written informs a person of skill in the art about the scope of the invention with reasonable certainty. Because the district court applied the wrong legal standard, the Court vacated and remanded the judgments of invalidity on grounds of indefiniteness. 

The opinion can be found here.

Valeant Pharmaceuticals International, Inc. v. Mylan Pharmaceuticals Inc., Appeal No. 2018-2097 (Fed. Cir. April 8, 2020)

In an appeal from the U.S. District Court for the District of New Jersey, the Court ‎reversed the district court’s grant of summary judgment holding the claim at issue in Valeant’s patent for ‎stable methylnaltrexone pharmaceutical preparations was not invalid. The case concerned an often-arising issue concerning overlapping ranges between prior art and the patented invention. The Court held the ‎district court erred in holding the claim nonobvious for two reasons. First, the Court held ‎that “prior art ranges for solutions of structurally and functionally similar compounds that overlap ‎with a claimed range can establish a prima facie case of obviousness,” because compounds that ‎share these similarities “are likely to share other properties.” Mylan ‎established a prima facie case of obviousness by submitting three prior art ranges for similar ‎compounds that overlapped the claimed ranges. Second, the Court held that the ‎district court erred in its obvious-to-try analysis by finding “the quantity of number ranges falling ‎between [three and seven] is infinite, not finite,” because the district court “ignored” the “realities of ‎‎[the] pH values” at issue. In this case, there was “no indication that pH is measured to any ‎significant figure beyond two digits.” Thus, the number ranges between three and seven are finite. ‎Accordingly, the Court reversed and remanded the action to the district court.

The opinion can be found here.

Technical Consumer Products, Inc. v. Lighting Science Group Corp., Appeal No. 2019-1361 (Fed. Cir. April 8, 2020)

In an appeal from an IPR, the Federal Circuit vacated and remanded a Patent Trial and Appeal Board determination that challenged claims directed to a low-profile light fixture were not anticipated or obvious. The Board’s determination turned on its finding that a prior art reference did not disclose a limitation requiring “the heat spreader, the heat sink and the outer optic, in combination,” to have a specified maximum dimensional ratio. The prior art fixture included two heat sinks operating together, and met the limitation when one heat sink was included in the ratio calculation, but not when both heat sinks were included. Because “the heat sink” in the challenged claims referred to a particular “ring-shaped” heat sink “disposed around … an outer periphery of the heat spreader,” the Federal Circuit found that the ratio limitation was properly construed as including only that heat sink. The Federal Circuit rejected appellees’ argument that the prior art was inoperative and non-enabling without the second heat sink, finding that nothing in the challenged patent’s claims or specification precluded the presence of additional heat sinks. As such, the prior art’s second heat sink was simply an unclaimed additional element that was irrelevant to the proper construction of the ratio limitation.

The opinion can be found here.

Keith Manufacturing Co. v. Butterfield, Appeal No. 2019-1136 (Fed. Cir. April 7, 2020)

In a case arising from a stipulated dismissal, the court addressed the extent to which it qualified as a “judgment” for purposes of Rule 54(d) The stipulated notice of dismissal, filed under FRCP 41(a)(1)(A)(ii), was silent as to costs and attorneys’ fees. Twelve days after the stipulated notice was filed, the defendant filed a motion for an award of its attorneys’ fees pursuant to FRCP 54(d). Rule 54 requires that an attorneys’ fee motion must be filed no later than 14 days after “judgment.” The question presented to the district court, thus, was whether a stipulated dismissal constitutes a judgment for purposes of Rule 54. The district court denied the fee motion, ruling that a stipulated dismissal is not a judgment for that purpose. The Federal Circuit vacated and remanded, ruling that a stipulated dismissal is sufficient to trigger the 14 day clock for filing a Rule 54 attorneys’ fee motion.

The opinion can be found here.

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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