Latest Federal Court Cases - February 2021 #3

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John Bean Technologies Corporation v. Morris & Associates, Inc., Appeal Nos. 2020-1090, -1148 (Fed. Cir. Feb. 19, 2021)

Our Case of the Week this week focuses on the doctrine of intervening rights, a doctrine that is rarely visited by the Federal Circuit. In this case, the Court addressed the question whether equitable intervening rights can apply even after a party has recouped its investment in the infringing technology.

The case involves poultry chillers, and two rivals in the market for same. In 2002, Morris wrote a letter to John Bean arguing that one of John Bean’s patents was invalid, and citing prior art. Morris received no response, and proceeded to develop and sell chillers that included features of John Bean’s patent.

Approximately 11 years later, John Bean submitted its patent for reexamination. In the process, it amended and added new claims. A reexamination certificate issued in 2014. Six weeks later, John Bean sued Morris for patent infringement. Morris moved for summary judgment of equitable intervening rights.

The doctrine of intervening rights is found in 35 U.S.C. § 252, and applies to reexamined patents under 35 U.S.C. § 307(b). Under those sections, an infringer may be protected from liability for infringement of claims that were substantively and substantially altered during either reissuance or reexamination of a patent. An infringer is entitled to “absolute” protection for infringement that occurred before the new or amended claims issued. An infringer may also be granted “equitable” intervening rights to continue the infringement if “substantial preparation was made before the grant of the reissue” “to the extent and under such terms as the court deems equitable for the protection of investments made or business commenced before the grant of the reissue.” The Federal Circuit has previously explained that “[t]he rationale underlying equitable intervening rights is that the public has the right to use what is not specifically claimed in the original patent.”

The district court granted Morris’s motion for equitable intervening rights after considering six factors, which including the investment made by Morris, facts concerning the infringer’s business and the industry in general, and “whether the infringer made profits sufficient to recoup its investment.” The Court found that, although Morris had recouped its investment, equitable intervening rights were still appropriate because “requiring a company to eliminate [two-thirds] of its business because a patent holder, after, a decade, decided to seek reexamination and enforce the patent is inequitable.”

John Bean appealed, arguing that the Court improperly granted equitable intervening rights, because Morris had recouped its investment. John Bean relied on a 10th Circuit case from 1979 in support of its position.

The Federal Circuit affirmed. It noted that equitable intervening rights are, of course, equitable, and thus subject to the discretion of the district court, subject to a high bar for review on appeal. The Court noted the issue raised was one of first impression for the Court. It held that “recoupment is not the sole objective of § 252’s protection of ‘investments made or business commenced’ before the claims’ alteration.” The Court held that it is a single factor among many that should be considered, but is not dispositive. The Court found no error in the district court’s application of equitable intervening rights after considering the impact of all of the stated factors, including the fact that Morris had already recouped its investment.

A copy of the opinion can be found here.

By Nika F. Aldrich

ALSO THIS WEEK

Canfield Scientific, Inc. v. Melanoscan, LLC, Appeal No. 2019-1927 (Fed. Cir. Feb. 18, 2021)

On appeal from the Patent Trial and Appeal Board, the Court reversed and remanded the Board’s ruling that the claims of the patent at issue were patentable. Canfield Scientific, Inc. instituted an inter partes review of Melanoscan, LLC’s patent related to a device for imaging of body surfaces to detect health and cosmetic conditions asserting unpatentability on the ground of obviousness. The Court held that the Board erred in finding the subject matter of the independent claims of the patent at issue would not have been obvious in light of the combined teachings of the prior art of record. Accordingly, the Court reversed the Board’s ruling that the independent claims were patentable and remanded the dependent claims to the Board because the Board did not reach the issue of whether the dependent claims were patentable in its ruling.

A copy of the opinion can be found here.

By Bazsi Takacses

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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