Latest Federal Court Cases - March 2020

Schwabe, Williamson & Wyatt PC

PATENT CASE OF THE WEEK

GS CleanTech Corp. v. Adkins Energy LLC, Appeal No. 2016-2231, 2017-1838, 2017-1832 (Fed. Cir. Mar. 2, 2020)

In this week’s Case of the Week, the Federal Circuit affirmed a district court’s bench trial judgment that asserted patents were unenforceable due to inequitable conduct, covering methods for recovering oil from ethanol production byproducts. The district court found that the inventors had made an offer to sell the patented system more than one year prior to filing the August 17, 2004 provisional application to which the patents claimed priority, and intentionally withheld information from the USPTO concerning the offer for sale. On appeal, the patent owner argued that the district court erred in its “on-sale bar” determination, as well as its conclusions regarding the inventors’ knowledge of materiality and their intent to deceive the USPTO.

The district court found the “on-sale bar” to be effected by a proposal sent by the inventors on August 1, 2003, for a “no-risk trial” of a module containing all components necessary to perform the oil recovery method, having successfully reduced it to practice in testing performed in June and July of 2003. The proposal included an option to return the system after a two-month trial period, or to “purchase the system” for $423,000. The Federal Circuit affirmed the district court’s findings that the proposal contemplated a “sale on approval” under the Uniform Commercial Code, and was an offer for sale for purposes of 35 U.S.C. § 102(b). The patent owner argued that the proposal was not an offer for sale because the inventors did not in fact perform the method before the critical date for a promise of future compensation, relying on Plumtree Software, Inc. v. Datamize, LLC, 473 F.3d 1152, 1162-63 (Fed. Cir. 2006). The Federal Circuit found this argument to be waived on appeal.

The Federal Circuit also affirmed the district court’s “intent to deceive” determination as supported by the evidence of record, including, inter alia, that the inventors had been advised and themselves researched the “on-sale bar” requirements; an inventor declaration submitted to the PTO falsely stating that the sales proposal was first delivered on August 18, 2003, which the inventors and their attorneys failed to correct even after it became clear that it was inaccurate; a letter filed with the PTO stating that feasibility testing was conducted “sometime in May 2004” with no mention of the testing in June and July of 2003; and the inventors’ and their attorneys’ attempts to induce the offer’s recipient to corroborate that the proposal was for experimental purposes, in exchange for a royalty-free license to the patents and a release from liability for prior use of oil recovery systems. The Federal Circuit also rejected the patent owner’s argument that the district court’s “materiality” findings were beyond the scope of the bench trial and violated its right to a trial by jury. The Court held that as part of the inequitable conduct inquiry, materiality was squarely before the district court, re-affirming that inequitable conduct is based in equity with no right to a jury trial.

Because it affirmed the district court’s findings with respect to inequitable conduct, the Federal Circuit did not reach the district court’s summary judgment findings of invalidity on other grounds.

The opinion can be found here.

ALSO THIS WEEK

Customedia Technologies, LLC v. Dish Network Corp. et al., Appeal No. 2018-2239 (Fed. Cir. Mar. 6, 2020)

This case involves two related patents directed to comprehensive data management and processing systems. Accused infringer Dish Network petitioned for CBM review. The Board instituted review and ultimately found multiple claims patent ineligible under 35 U.S.C. § 101. Patent owner Customedia appealed. In applying Alice step one, the Court affirmed the Board’s ineligibility finding on grounds that the claimed invention was at most an improvement to the abstract concept of targeted advertising where the computer is used only as a tool. The Court found nothing in the claims that improved the functioning of the computer. Applying Alice step two, the Court agreed with the Board that considering the elements of the challenged claims individually and as an ordered combination, the claims failed to recite an inventive concept. In view of these findings, the Court affirmed the Board’s finding of unpatentability under § 101.

The opinion can be found here.

Comcast Corp. v. Int’l Trade Commission, Appeal Nos. 2018-1450, -1653, 1667 (Fed. Cir. Mar. 2, 2020)

In Comcast Corp. v. Int’l Trade Comm’n, the Federal Circuit affirmed the International Trade Commission’s (“ITC”) ruling barring the importation of Comcast’s X1 set-top boxes because the boxes infringed several of Rovi Corporations and Rovi Guides, Inc.’s (together, “Rovi”) patents. The Court agreed with ITC that Comcast was an importer for the purposes of Section 337 of the Tariff Act of 1930, because “Comcast [was] sufficiently involved in the importation of the accused products that it satisfie[d] the importation requirement.” Comcast’s involvement included exclusive control over “the volume of accused products that enter[ed] the United States.” The Court also denied Comcast’s motion to dismiss for mootness based on the expiration of two of Rovi’s patents at issue, holding the other pending ITC investigations involving the set-top boxes and Rovi’s unexpired patents were “sufficient collateral consequences to negate mootness.”

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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