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. In this update, we also discuss a decision where the Federal Circuit found that the appellant lacked standing.
Quick takeaways:
- Modernatx, Inc. v. Arbutus Biopharma Corp.: A sublicensee lacks standing to appeal the Board’s IPR decision when the challenged patent is only one of multiple patents licensed, there is no evidence that invalidating the challenged patent would affect any payment obligations, and additional payments under the sublicense are speculative.
- Ideal Innovations, Inc. v. US: Reduction to practice does not require that the invention, when tested, be in a commercially satisfactory stage of development.
- Low Temp Industries, Inc. v. Duke Mfg. Co.: It is error to require "adjacent" wells to touch, when the patent’s disclosure describes a distance between adjacent wells; since a prior art reference discloses the disputed term "adjacent" wells under the proper claim construction, raising a substantial question regarding validity, the trial court’s entry of preliminary injunction is reversed.
- Intel Corp. v. Qualcomm Inc. (No. 20-1664): Combination with a prior art design that has shortcomings to arrive at the claimed invention is not necessarily impermissible hindsight because it is not necessary to show that the combination is "the best option, only that it be a suitable option."
- Intel Corp. v. Qualcomm Inc. (No. 20-1828): Claim construction analysis is inadequate when it is not clear what the construction means and when there is no explanation how the construction is tied to the specification; for means-plus-function terms, the Board cannot simply accept a challenger's concession of indefiniteness and must determine for itself whether those claims are indefinite and whether it can resolve the patentability challenges despite the (potential) indefiniteness of those claims.
Modernatx, Inc. v. Arbutus Biopharma Corp., No. 20-1184, 18 F.4th 1352 (Fed. Cir. Dec. 1, 2021)
Arbutus owned a patent relating to nucleic acid-lipid particles. Moderna challenged various claims of the patent in an inter partes review proceeding, and the Board found some claims not unpatentable as anticipated or obvious and other claims unpatentable as anticipated. Moderna appealed and Arbutus cross-appealed. The Federal Circuit dismissed Moderna’s appeal for lack of standing and affirmed the Board’s decision on Arbutus's cross appeal.
On the question of standing, the Federal Circuit analyzed whether Moderna met the requirements to have standing at the time of filing the appeal and at all times throughout the appeal. Moderna’s initial standing argument was based on its status as a sublicensee to practice the patented technology for four viral targets, and that it was actively developing one of the four targets, the RSV viral target. Months later, Moderna provided additional evidence, which was related to its development of a COVID-19 vaccine. Moderna argued that aggressive public statements by Arbutus, Arbutus's refusal to grant Moderna a covenant not to sue, and Arbutus’s repeated insistence that Moderna license Arbutus's patents created a significant risk for a potential infringement suit for the COVID-19 vaccine. Regarding the four viral targets, Moderna had terminated the RSV development and none of the four viral targets were being pursued to further phases.
The Federal Circuit held that Moderna lacked standing when the appeal was filed. Even for the RSV program that was active, Moderna's evidence of financial burdens was too speculative – the last milestone license payment was years earlier, and additional milestone payments were conditioned on "if and when" a future milestone was reached. The Federal Circuit found these alleged financial burdens to be insufficient to show "concrete" injury. Even more problematic, the challenged patent was only one of many licensed patents. The facts resembled Apple Inc. v. Qualcomm Inc., 992 F.3d 1378 (Fed. Cir. 2021), where the Federal Circuit found no standing because multiple patents had been licensed. There was no evidence that invalidating the challenged patent would affect any contractual rights and payment obligations.
Additionally, the Federal Circuit held that Moderna did not demonstrate the necessary continuity of jurisdiction. The record was not clear whether, by the time the RSV development program was terminated, Moderna was already sufficiently underway with its development of a COVID-19 vaccine to create a substantial risk of an infringement action.
Therefore, the Federal Circuit dismissed Moderna’s appeal for lack of standing.
Ideal Innovations, Inc. v. US, No. 20-2065, 2021 WL 5754818 (Fed. Cir. Dec. 3, 2021)
The patents at issue related to an improvement of armored vehicles, by installing heavy armor only in specific areas that receive the greatest ballistic threat to protect vehicle occupants from harm, while maintaining the vehicle’s mobility through reduced weight. The inventor approached the government with a proposal to implement the configuration in a commercially available vehicle. The inventor also conducted a test on sample armor kits (coupon testing), which showed that some armor could withstand attacks.
Several months later, the inventor's company entered into a cooperative research and development agreement ("CRADA") with the government to select the best armor to use. The parties had a mutual license to practice any invention made under the CRADA. A couple of weeks after the CRADA was fully executed, testing was successfully performed on a fully assembled vehicle. Despite the success, the government ultimately rejected the vehicle proposal. Later, the inventor sued the government in the Court of Federal Claims ("CFC") for patent infringement and trade secret misappropriation, which was later narrowed to patent infringement.
The central issue was whether the inventions were reduced to practice prior to the effective date of the CRADA, or during the term of the CRADA (the period that would provide the government a license to practice the invention). The CFC found that reduction to practice required testing a fully assembled vehicle, and because no such testing took place before the CRADA’s effective date, the CFC dismissed the action on summary judgment.
The Federal Circuit disagreed. Reduction to practice does not require that the invention, when tested, be in a commercially satisfactory stage of development. The Federal Circuit concluded that a genuine dispute existed as to an issue of material fact—namely, whether a person of ordinary skill in the art would have known, based on the coupon testing, that the invention would work for its intended purpose. Accordingly, it reversed the CFC’s grant of summary judgment and remanded for further proceedings.
Low Temp Indus., Inc. v. Duke Mfg. Co., No. 21-2137, 2021 WL 6124455 (Fed. Cir. Dec. 28, 2021)
LTI owned patents relating to multi-well food presentation modules, where hot food in one well could be next to cold food in another well. LTI sued Duke for patent infringement and moved for a preliminary injunction against Duke. The district court granted the motion. Duke appealed, and the Federal Circuit agreed with Duke and reversed the entry of the preliminary injunction.
In seeking a preliminary injunction, the patentee has the burden to show a likelihood of success on the merits (i.e., the patentee will show that accused product infringes and will show that it can overcome challenges to the patent's validity). If the accused infringer raises a substantial question regarding validity, the district court should find that the patentee has not shown a likelihood of success on the merits.
For all but one claim, LTI only disputed whether a prior art reference disclosed wells "adjacent" to each other. The district court interpreted "adjacent" to require two immediately adjacent pans, and found that the wells in the prior art reference were not touching and therefore were not adjacent. That understanding, however, was at odds with the patent’s disclosure which described a "distance" between adjacent wells. Additionally, the prior art reference disclosed two wells within a single apparatus, and the district court provided no explanation why those wells were not adjacent. Therefore, the Federal Circuit held that the district court’s finding could not be sustained.
For the remaining one claim that required one or more wells to be independently temperature controlled, the invalidity challenge was grounded in obviousness by combining with another reference. The Federal Circuit found that LTI's argument was not responsive to Duke’s position – which therefore stood unrebutted. And LTI’s objective indicia evidence was not tied to the asserted claim.
Therefore, the Federal Circuit reversed the district court's entry of the preliminary injunction.
Intel Corp. v. Qualcomm Inc., No. 20-1664, 2021 WL 6122360 (Fed. Cir. Dec. 28. 2021)
Intel petitioned for inter partes review of a patent directed to a wireless communication device that provided gain adjustment in a stepwise manner. The Board found unpatentable some (but not all) of the challenged claims and some (but not all) of the proposed substitute claims. Intel appealed the decision regarding the surviving claims. The Federal Circuit affirmed as to the originally challenged claims, but vacated as to the substitute claims.
Regarding the surviving substitute claims, the Board determined that a skilled artisan would have lacked reason to combine prior art references for three reasons: (1) that Intel’s energy-efficiency theory was too generic, (2) that the selected prior art design had shortcomings, and (3) that the combination would render a prior art reference unsuitable for its intended purpose. The Federal Circuit assessed these reasons mainly under the guidance from KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007), and held that none of the reasons were supported by substantial evidence.
Regarding (1), the Board looked to a previous decision where the Federal Circuit rejected a rationale based on generic reasons to combine. But that decision did not denounce energy efficiency as per se insufficient as the Board’s decision suggested. Quite the opposite, the Federal Circuit had held that making a device more efficient can be a motivation to combine. Additionally, to the extent that "generic" was used to mean "conclusory," Intel's expert explained precisely how and why a skilled artisan would have combined the references, which was not conclusory.
Regarding (2), the Board noted that the selected design had problems and Intel had not demonstrated why a skilled artisan would have selected less effective prior art designs. The Board thus found it to be impermissible hindsight. The Federal Circuit disagreed, holding that it was not necessary to show that a combination was "the best option, only that it be a suitable option."
Regarding (3), the Federal Circuit found factual support that was contrary to the Board’s assertion. Further, the intended purpose of a prior art reference did not control, and familiar items may have obvious uses beyond their primary purposes.
Therefore, the Federal Circuit vacated the Board’s determination as to the surviving substitute claims and remanded for further proceedings.
Intel Corp. v. Qualcomm Inc., No. 20-1828, 2021 WL 6122434 (Fed. Cir. Dec. 28. 2021)
Qualcomm owned the challenged patent which addressed multi-processor systems in which software stored in memory coupled to a first processor was to be used by a second processor. Intel challenged all claims in three inter partes reviews. The Board found unpatentable some claims, but not claims 1-9, 12, 16, and 17. The Federal Circuit vacated the decision regarding claims 1-9, 12, 16, and 17.
Regarding claims 1-9 and 12, the Board found that the prior art reference did not disclose claim limitation "hardware buffer," which the Board construed to exclude the use of a temporary buffer. The Federal Circuit stated that it was not clear what precisely constituted a "temporary buffer" and held the Board’s analysis to be inadequate. The Federal Circuit noted that there was no clear, undisputed meaning of the term in either ordinary English or in relevant technical parlance. In the Federal Circuit's view, the construction was not adequate and the Board was better positioned to conduct more analysis to construe the term, including an analysis of the specification, expert explanation, inventor testimony, and the distinction in hardware and software usage. The Federal Circuit thus remanded for reconsideration of claim construction.
As to claims 16 and 17, after Intel agreed with the Board’s suggestion that two terms were indefinite, the Board concluded that Intel’s statement necessarily meant that Intel, as the petitioner, had not met its burden to demonstrate the unpatentability of those claims. But the Board did not decide for itself whether the required structure was present in the specification or whether, even if it was not, the absence of such structure precluded resolution of Intel's prior-art challenges. The Federal Circuit held that to be error and remanded for the Board to address those issues.
