Supreme Court and Precedential Federal Circuit Patent Cases

by Schwabe, Williamson & Wyatt PC
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In SCA v. First Quality Baby Products, the Supreme Court holds that laches should not be available as a defense in patent cases, refusing to concur with the Circuit’s en banc holding that the Patent Act’s 6-year limitation on damages is different from the Copyright Act’s 3-year statute of limitations. See our report. In Bayer v. Dow and University of Utah v. Max Planck, the Circuit refuses to substitute its judgment for that of the district courts in section 285 determinations, ruling in each case that there was no abuse of discretion in awarding and denying attorney fee awards. In TVIIM v. McAfee, the panel refuses to permit the appellant TVIIM to raise new claim construction arguments on appeal.

Thanks to my colleague Graciela Gomez Cowger for her help with this week’s report.

Pete

Bayer Cropscience v. Dow Agrosciences, Fed. Cir. Case 2015-1854 (March 17, 2017)

The Circuit easily determines that, under Octane Fitness and Highmark, the district court did not abuse its discretion in awarding Dow attorney fees under section 285 because the case stands out from others both as to its lack of substantive strength and the unreasonable manner in which Bayer conducted the litigation.

Bayer sued Dow for patent infringement even though it had entered into a license agreement in which Dow was permitted to commercialize soybeans that were genetically engineered to tolerate herbicides. Bayer took the position that Dow’s license was limited to non-commercial transactions. The district court disagreed, concluding that Bayer’s reading of the contract was “contorted,” and was even contradicted by Bayer’s own witnesses.  

The parties agreed that English law governed, so Bayer presented expert testimony from a former Justice of the Supreme Court of the United Kingdom that Bayer’s interpretation was reasonable. However, there was no dispute that under U.K. law, the circumstances surrounding the execution of an agreement are admissible. Not only did all of the evidence of surrounding circumstances support Dow’s position, but Lord Collins conceded that his opinion was “incomplete” because he had only considered the text of the agreement. The surrounding circumstances included contemporaneous correspondence between the parties confirming that the intent of the agreement was to convey all commercial rights to Dow.   

The manner in which Bayer litigated the case included the fact that Bayer added this patent infringement claim to an ongoing case between the parties only a few days after Dow issued a press release announcing its plans to commercialize the covered soybean product. And then, eighteen months later, Bayer filed a motion for preliminary injunction, even though Dow had not yet introduced the product. The district court ruled that had Bayer fully investigated its position, even just the evidence in its own control, it would not have filed the action. Moreover, the filing of a preliminary injunction amid targeted discovery that would prove fatal to its case rendered the motion “frivolous,” and unnecessarily increased the costs of the litigation.

The panel refuses to accept Bayer’s invitation to reweigh the evidence, as under Highmark the appropriate review is simply to determine if the district court abused its discretion. After reviewing the foregoing evidence, the panel determines that the district court did not abuse its discretion in determining that, under the totality of the circumstances, this was an exceptional case.

Read the full opinion

University of Utah v. Max Planck Gesellschaft, Fed. Cir. Case 2016-1336 (March 23, 2017)

The Circuit affirms the denial of attorney fees under § 285, showing how deferential it will be in such “abuse of discretion” rulings. The underlying dispute concerns inventorship of the Tuschl II patents, which relate to RNA interference (“RNAi”), a process that may be useful in treating a variety of diseases associated with overactive or mutated genes. Dr. Thomas Tuschl published an article describing various discoveries in the field of RNAi. Less than a month later, Dr. Brenda Bass, of the University of Utah (“UUtah”), published a mini-review that summarized the state of RNAi research. Dr. Bass’s mini-review included several of her own hypotheses about enzymatic processes that may be responsible for the RNAi activity reported in Dr. Tuschl’s article.

After publishing his article, Dr. Tuschl transitioned to a new line of research that would result in the patented Tuschl II invention. Dr. Tuschl read Dr. Bass’s mini-review, recognized her hypothesis that 3’ overhangs may be relevant to RNAi, and successfully tested that hypothesis. Data from cloning and sequencing revealed that species with 3’ overhangs were prevalent in active RNAi systems. Based on these data, the Tuschl II inventors chemically synthesized candidate molecules with and without 3’ overhangs and tested for RNAi activity. Max Planck filed a patent application for the discovery.

UUtah sued Max Planck for correction of ownership, claiming that Dr. Bass should be named as a sole or joint inventor of the Tuschl II patents. UUtah’s claim of sole inventorship turned on allegations that Dr. Bass reduced to practice the concept that molecules with 3’ overhangs would be integral to RNAi, focusing primarily on Dr. Bass’s mini-review. Its claim of joint inventorship turned on alleged collaboration between Dr. Bass and the Tuschl II inventors that occurred over several conversations at various academic conferences.

During her deposition, Dr. Bass made several admissions undermining UUtah’s allegation that Dr. Bass reduced the Tuschl II invention to practice. When asked if she ever did any of the experiments included in the Tuschl II patents,” she responded: “Not that I know of.” When asked if her lab ever studied how to put siRNAs on cells, she responded: “No.” When asked if she ever tested siRNAs as agents for targeting messenger RNAs, she responded: “No.”

On the eve of the deadline for dispositive motions, UUtah withdrew its sole inventorship claims, but declined to withdraw its joint inventorship claim. The district court then granted Max Planck’s motion for summary judgment as to that claim.

Max Planck sought eight million dollars in attorney fees pursuant to 35 U.S.C. § 285, which the district court denied. Max Planck argued on appeal that the court disregarded the Supreme Court’s direction in Octane Fitness by failing to consider the substantive weakness of UUtah’s litigation position in light of Dr. Bass’s deposition testimony, but the panel disagrees. District courts have discretion to make exceptional case determinations on a case-by-case basis, considering the totality of the circumstances. A “case presenting either subjective bad faith or exceptionally meritless claims may sufficiently set itself apart from mine-run cases to warrant a fee award.” Other factors that may support a finding of exceptional case include frivolousness, motivation, objective unreasonableness of a case’s factual or legal components, and the need in particular circumstances to advance considerations of compensation and deterrence. The district court made no finding that any of these factors applied here, but according to the panel, she had no obligation to write an opinion that reveals her assessment of every consideration. The opinion concludes with the statement that the Circuit will not second guess her determination.

Read the full opinion

TVIIM v. McAfee, Fed. Cir. Case 2016-1562 (March 21, 2017)

The Circuit affirms the district court’s findings of non-infringement and invalidity under a uniform construction of disputed claim terms after finding that TVIIM waived its right to any new claim construction. The panel also holds that the district court did not abuse its discretion in denying a new trial.

TVIIM sued McAfee for infringement of a patented system that both identifies potential security threats to a computer and, under certain conditions, recommends action to a user to stop the threat. McAfee asked the district court to construe a single claim term: “vulnerability.” The court ruled that “vulnerability” should have its plain and ordinary meaning, which is not limited to pre-existing security problems or vulnerabilities. The parties agreed that “vulnerability” is an “exploitable weakness in a computer system.”

The jury returned a verdict finding that McAfee did not infringe and that the patent was invalid. TVIIM moved for JMOL, which the district court denied. TVIIM argued on appeal that the jury’s findings are inconsistent since it could not have issued a verdict of non-infringement and invalidity because the disputed claim terms have more than one ordinary meaning. But the Circuit is quick to note that TVIIM did not seek the district court’s construction of any of the disputed terms. Specifically, TVIIM never presented multiple ordinary meanings of the disputed claim terms or showed that the disputed claim terms are open to varying interpretations. The Circuit thus holds that TVIIM waived any new construction of the disputed claim terms by not requesting that these terms be construed by the district court. The Circuit also rules that substantial evidence supports the jury’s verdict of non-infringement based on using the same construction it used for its invalidity verdict. Finally, the panel holds that even if an error occurred in the jury’s verdict of infringement, such an error was harmless. 

Read the full opinion

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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