Overview
In this series of monthly updates, we summarize decisions where the Federal Circuit reversed or vacated PTAB or trial court rulings, which can provide guidance on how to succeed on appeal.
Quick takeaways:
- The Federal Circuit vacated the PTAB's decision when the petitioner did not have notice of, or an adequate opportunity to respond to, the PTAB's sua sponte novel construction of a previously undisputed claim limitation in the final written decision.
- Publication of the asserted trade secrets restricted damages to the head-start period, and the failure of tying the damages to the head-start period caused the Federal Circuit to vacate the $11 million damages award.
- Pleading standard was found to be too strict and the district court's dismissal as to two patents was found to be error when the complaint alleged specific evidence to show that the accused products may practice the claim limitations; at the same time, the district court correctly dismissed the claims as to two other patents, where the infringement allegations were either conclusory and merely tracking the claim language, or were inconsistent and contradictory.
- There was no motivation to combine when doing so would necessarily alter the inventive concept of the prior art reference; when analyzing the commercial success evidence under the blocking patent doctrine, the PTAB incorrectly used the challenged patent as a blocking patent since the blocking patent had to be an earlier patent; the disclosure of limitations in prior art did not negate a nexus between the claimed invention and the alleged commercial success.
- The Federal Circuit found that the PTAB erred by basing its obviousness finding on a ground of unpatentability not presented by petitioner.
- The Federal Circuit vacated the obviousness decision when it was unable to discern the PTAB's basis for rejecting Applicant’s teaching-away arguments.
- Relying on a previous decision involving similar issues, the Federal Circuit again rejected the contracted venue and ordered the case to be transferred from the Western District of Texas to the Northern District of California, which was clearly a more convenient venue.
Qualcomm Inc. v. Intel Corp., No. 2020-1589 to 1594 (Fed. Cir. July 27, 2021)
In this case, the Federal Circuit vacated the Board's decision because Qualcomm was not given adequate notice of, and an opportunity to respond to, the Board's sua sponte claim construction. The claim term at issue is "a plurality of carrier aggregated transmit signals." During the IPR proceeding, Qualcomm proposed the construction that the signals were required to increase user bandwidth. Intel did not dispute this construction, and all briefing included an increased bandwidth requirement. But in the final written decision, the Board omitted the requirement that the signals increase the bandwidth and found the claims obvious. Qualcomm appealed, arguing that it was not given adequate opportunity to respond to the Board’s construction. The Federal Circuit agreed with Qualcomm.
The Federal Circuit rejected Intel's first argument that Qualcomm had not demonstrated prejudice. By removing the increased bandwidth requirement, the PTAB eliminated an element on which Intel bore the burden of proof. Without notice, Qualcomm had no reason to brief that requirement and was prejudiced. Intel also made two additional arguments that (1) the hearing provided notice and opportunity to respond and (2) Qualcomm's option to move for rehearing provided an adequate opportunity to respond. The Federal Circuit disagreed. At the hearing, only a single question was asked about the support for requiring to increase user bandwidth, which did not provide Qualcomm notice that the Board might depart from the undisputed claim construction. Regarding the option to seek rehearing, generally, a party does not need to seek rehearing in order to appeal the PTAB's decision.
Therefore, because Qualcomm did not have adequate notice of and opportunity to respond to the PTAB's sua sponte claim construction, the Federal Circuit vacated the decision and remanded for further proceedings.
Nite Glow Industries Inc. v. Central Garden & Pet Co., No. 20-1897 (Fed. Cir. July 14, 2021)
In this case, the jury found for Plaintiffs and awarded $11 million in damages for misappropriation of ideas, as well as additional damages for breach of contract and patent infringement. The district court entered a judgment for the misappropriation of ideas and awarded damages, entered a judgment for the breach of contract claim but eliminated the damages as duplicative of the damages awarded for misappropriation, and entered a judgment of non-infringement. The parties appealed and cross-appealed. The Federal Circuit vacated the award of damages for misappropriation and remanded for a new trial, and affirmed the other issues.
Regarding the award of damages, while the Federal Circuit affirmed the misappropriation of ideas claim, it disagreed with the amount of damages, because the publication of a patent application had made the idea public. Thus, under the applicable New Jersey law, damages were restricted to the "head start" period - the period in which information is entitled to protection as a novel idea, plus the additional period, if any, in which a misappropriator retains an advantage over good faith competitors because of the misappropriation.
Plaintiffs did not tie their damages request to a head-start period. Instead, they argued it was defendants' burden to present evidence of head-start damages. The Federal Circuit disagreed, and reasoned that determining head-start damages was part of plaintiffs' burden of proof, not an affirmative defense as to which defendants would bear the burden of proof. Because plaintiffs were limited to head-start damages but did not provide evidence that would support the damages award of over $11 million, the Federal Circuit vacated the jury award of damages for misappropriation, and remanded for a new trial on head-start damages.
Bot M8 LLC v. Sony Corp. of Am. et al, No. 20-2218 (Fed. Cir. July 13, 2021)
In this case, the Federal Circuit addressed the stringency of pleading requirements in patent infringement cases. The district court granted dismissal as to four patents for failure to state a claim. The Federal Circuit found no error as to two of the patents, because the allegations were either conclusory and merely tracking the claim language, or were inconsistent and contradictory.
With respect to the other two patents, the Federal Circuit found that the district court erred in dismissing the claims. The discussion focused on one claim limitation that required the completed execution of a fault inspection program before the game was started. The District court dismissed the case on the basis that the complaint provided no basis to infer the proper timing of inspection. The Federal Circuit disagreed because the complaint included specific evidence to demonstrate that a fault inspection program concluded prior to the starting of a game. Nothing more was required at this stage. Accordingly, the Federal Circuit found that the district court erred in dismissing the claims as to the other two patents.
The Chemours Co. FC, LLC v. Daikin Industries, Ltd., No. 2020-1289, 1290 (Fed. Cir. July 22, 2021)
In this case, the Federal Circuit majority reversed the PTAB’s obviousness decision. The relevant claim limitation was "melt flow rate" and the prior art reference taught a lower melt flow rate than the claimed range. The PTAB found that a skilled artisan would have been motivated to increase the melt flow rate of the prior art reference’s preferred embodiment to within the claimed range.
The Federal Circuit majority disagreed, finding that increasing the prior art’s melt flow rate would obtain a broader molecular weight distribution, which would alter the reference’s inventive concept, i.e., a narrow molecular weight distribution. The prior art reference also cautioned that certain techniques that increased melt flow rate should not be used due to the risk of obtaining a broader molecular weight distribution. Therefore, the Federal Circuit majority found no substantial evidence to support that a POSA would have been motivated to increase the prior art reference’s melt flow rate to the claimed range, when doing so would necessarily alter the inventive concept of a narrow molecular weight distribution polymer.
Additionally, the Federal Circuit majority disagreed with PTAB’s commercial success analysis. The PTAB found no nexus between the claimed invention and the alleged commercial success because all features were disclosed in prior art. The Federal Circuit majority disagreed, stating that the disclosure of limitations does not negate a nexus; otherwise, a nexus could never exist when the invention claims a combination of known elements. The Federal Circuit found that the PTAB also erred in requiring the market share data to establish commercial success. While market share data is useful, it is not required to show commercial success. Additionally, the Federal Circuit majority found that PTAB erred in applying the blocking patent doctrine. Under the doctrine, courts may reduce the weight given to evidence of commercial success where an earlier patent blocked market entry by others. Therefore, the blocking patent has to be an earlier patent, and the Federal Circuit found the PTAB erred by using the challenged patent as a blocking patent.
Oren Tech. LLC v. Proppant Express Investments, No. 19-1778 (Fed. Cir. July 23, 2021)
In this case, the PTAB found the challenged claims obvious. The Federal Circuit reversed the PTAB’s decision on the claims that recite a "30,000 pound" limitation, because the PTAB erred by basing its obviousness finding on a ground of unpatentability not presented by petitioner. For the remaining claims, the Federal Circuit vacated the obviousness decision because the PTAB failed to properly analyze the objective indicia of evidence.
Regarding the claims having the "30,000 pound" limitation, the prior art compartment disclosed holding a maximum of 26,250 pounds. The PTAB found that the limitation was met by modifying the prior art container to be capable of holding 40,000 pounds per compartment. The Federal Circuit disagreed because Petitioner had not advanced the modification theory in relation to the claim limitation. Instead, it was presented in the context of motivation to combine, and the Federal Circuit found that the Board erred by repurposing the theory. Additionally, the Federal Circuit found that the theory of modifying the container did not necessarily achieve the results stated by the PTAB. The Federal Circuit thus reversed the PTAB's decision on these claims.
For the remaining claims that do not recite the 30,000 limitation, the Federal Circuit disagreed with the PTAB’s objective indicia analysis. The patentee presented evidence that mapped its product to the claimed container, establishing a presumption of a nexus. However, the PTAB found that the presumption was rebutted because other aspects were shown to be responsible for the system’s success. The Federal Circuit vacated that finding because the Board did not weigh the evidence that the product itself was also an important contributor to the commercial success, including lease and license revenue, contracts for the patented process, and market praise of the technology. The Federal Circuit found that it was not necessary that the patented invention be solely responsible for the commercial success. According, the Federal Circuit vacated the PTAB’s decision on the remaining claims and remanded.
In re Kirilichin, No. 2021-1168 (Fed. Cir. July 20, 2021).
The PTAB found claims obvious over two references. However, the PTAB did not sufficiently address the Applicant's teaching-away argument. In fact, the PTAB did not even mention teaching away in its decision. Because of that, the Federal Circuit vacated the decision since it was unable to discern the Board’s basis for rejecting the teaching-away arguments.
In Re Uber Technologies, Inc. (Fed. Cir. July 8, 2021)
In the District Court for the Western District of Texas, Uber's motion to transfer the case to the Northern District of California was denied. Specifically, the district court found that the California forum would not be a proper venue for resolving certain claims, which were limited to geographic rights in Texas. Alternatively, the district court found that Uber had failed to show that Northern District of California was clearly more convenient. Uber then filed a writ of mandamus petitioning for the case to be transferred.
The Federal Circuit granted Uber’s petition. The Federal Circuit's analysis relied primarily on a previous decision that presented identical issues. In re Samsung Electronics Co., Nos. 2021-139, -140, 2021 WL 2672136 (Fed. Cir. June 30, 2021) ("Samsung"). Regarding venue, in Samsung, the Federal Circuit rejected the district court's determination that the actions could not have been brought in the transferee venue. Additionally, in Samsung, the Federal Circuit found that the district court erroneously diminished the relative convenience of the Northern District of California, where several potential witnesses resided. In Samsung, the Federal Circuit also rejected the district court's conclusion that the local interest factor was neutral, because the accused functionality was researched, designed, and developed in the transferee venue.
Because the district court relied on the same improper grounds as in Samsung, the Federal Circuit granted Uber's petition and directed the district court to transfer the case to the Northern District of California.
