Overview
In this series of monthly updates, we summarize decisions from the past month from the Federal Circuit that reversed or vacated PTAB or lower court rulings, which can provide guidance on how to succeed on appeal.
Exmark Mfg. Co., Inc. v. Briggs & Stratton Corp., Case No. 19-1878 (Fed. Cir. Oct. 6, 2020)
The district court construed the claims to require spatial separation between the terms "first flow control baffle" and the "front wall." According to the district court, the spatial separation is required because the claim requires two distinct structures (a "front wall" and a front "flow control baffle") and the front flow control baffle must be between the blades and the front wall.
The Federal Circuit found that the district court erred in importing the requirement of spatial separation. First, the separate recitation of the structures does not preclude physical contact between them, and the specification is silent as to any spatial requirement between front wall and flow control baffle. Second, although the figures in the specification depict some distance between the front wall and the flow control baffle, these exemplary illustrations are not sufficient to impose a spatial separation requirement on claim language that is otherwise silent. It is not enough that only embodiments, or all the embodiments, contain a particular limitation to limit claims beyond their plain meaning. Finally, the Plaintiff-Appellee argued during reexamination that the claim did not preclude contact between the flow control baffle and the front wall.
Although the Federal Circuit vacated the district court's construction of "flow control baffle" to the extent it required spatial separation, this did not require a reversal or remand of the district court’s rulings as to validity and infringement.
AntennaSys, Inc. v. AQYR Techs., Inc., Case No. 19-2244 (Fed. Cir. Oct. 7, 2020)
The Federal Circuit stated that it couldn't decide the claim construction issue on appeal until it first determined whether the suit was permitted.
In this case, the asserted patent has two named inventors who assigned their interest to their respective employers: AntennaSys (the plaintiff in this case) and Windmill (one of the defendants). Windmill acquired an exclusive license to AntennaSys's one-half interest. AntennaSys then sued AQYR, Windmill's wholly-owned subsidiary, for infringement of the patent, and later amended the complaint to add Windmill as a defendant for other claims. Following claim construction, AnetnnaSys conceded that it could not prevail on its patent infringement claim, and the district court entered judgment for Windmill and AQYR.
AntennaSys appealed the district court's claim construction, and the Federal Circuit held that, as a threshold matter, it needed to decide whether Windmill must be joined as a co-plaintiff, and whether AQYR was authorized to use the patent. With limited exceptions, an action for infringement must join as plaintiffs all co-owners. Due to the lack of a complete factual record, the Federal Circuit vacated and remanded the case back to the district court to decide these threshold issues.
In the event the district court concludes that AntennaSys's patent infringement claim - the sole federal question in the lawsuit - should be dismissed, the district court had no independent jurisdiction over the state law counts remaining. Accordingly, if the patent infringement count is dismissed, this case belongs in state court.
Ecoservices, LLC v. Certified Aviation Servs., LLC, Case No. 19-1602 (Fed. Cir. Oct. 8, 2020)
The Federal Circuit affirmed a judgment that two patents pertaining to washing airplane engines are not invalid or indefinite and are infringed. But the court found that the district court abused its discretion in awarding supplemental damages and an ongoing royalty based upon a rate of $400 per infringing engine wash—the rate used as the basis of the jury’s damages award—because an ongoing royalty cannot include compensation for infringement of an expired patent.
Specifically, the Federal Circuit found that the $400 per wash rate could not be a basis for an ongoing royalty because it was based almost exclusively on the value of the '860 patent, which expired in 2016. Testimony showed that patent owner's damages expert awarded little, if any, value to the unexpired '262 patent because the ’860 patent would have been the "driver of the negotiation" in the hypothetical negotiation in 2010. An ongoing royalty can serve as a replacement for whatever reasonable royalty a later jury would have calculated in a suit to compensate a patentee for future infringement. Here, the jury's per-wash damages rate included compensation for infringement of the now-expired '860 patent. The district court therefore abused its discretion because the record did not support a royalty of $400 per wash for infringement of the '262 patent alone.
The court vacated the supplemental damages award and ongoing royalty rate and remanded the case to the district court for a redetermination of the proper amounts.
St. Jude Medical, LLC v. Snyders Heart Valve LLC, Case No. 19-2108, 2109, 2140 (Fed. Cir. Oct. 15, 2020)
A Federal Circuit panel addressing appeals of two IPRs rejected the Board's construction and reversed a finding that patent claims directed to an artificial heart valve and a system for inserting the valve were invalid as anticipated. The court also affirmed all of the Board's other anticipation and obviousness rejections in the two cases.
In IPR2018-00106, the Board determined that the petitioner had proved that a reference anticipated certain claims of the '782 patent. On appeal, patent owner argued that the Board erred in construing a "sized and shaped" limitation when it determined that the claim language did not require the frame be sized and shaped for insertion into a damaged heart valve, but only that it be suited for insertion between an upstream and downstream region of the artificial valve. Patent owner argued that this construction was incorrect because it covered frames sized and shaped for installation with the native heart valve removed.
The Federal Circuit agreed with patent owner, noting that the claim language suggests a focus on how the frame is fitted to the surrounding material, which depends on whether the native valve remains. The '782 patent's specification includes specific descriptions of overcoming deficiencies in the asserted reference and states that inserting the artificial heart valve without removing the native valve is an improvement on the prior art. The Federal Circuit reversed the Board because those passages made it unreasonable to read the "sized and shaped for insertion" limitation as covering an artificial valve fitted for the space left after removing the native valve.
TecSec, Inc. v. Adobe Inc., Case No. 19-2192 (Fed. Cir. Oct. 23, 2020)
The Federal Circuit reversed a decision that barred TecSec from presenting evidence that Adobe induced infringement of asserted patents, sending the case back to the district court for the third time.
TecSec brought this case in 2010. On March 3, 2011, the district court construed several claim terms, including "multimedia," and based on those constructions, granted summary judgment of non-infringement. On October 2, 2013, the Federal Circuit reversed the claim construction of "multimedia." However, because of the earlier claim construction and the summary judgment decision of non-infringement, on November 21, 2018, the district court excluded all evidence of induced infringement after March 3, 2011. The district court provided two reasons for that decision: (1) the March 3, 2011 claim construction and stipulation of non-infringement made it legally impossible for Adobe to have had, after that date, the knowledge required for inducement; and (2) allowing either party to present evidence would substantially prejudice the other party and confuse the jury. The Federal Circuit disagreed with both conclusions.
On the first point, the Federal Circuit reasoned that the intent standard can be met by proof of the defendant’s subjective state of mind. Adobe may have believed the March 2011 claim construction was reasonable but erroneous. The claim construction ruling is not entitled to a no-knowledge finding as a matter of law, but merely creates at most a factual question.
On the second point, the district court argued that if TecSec were allowed to argue inducement of infringement after that date, Adobe would need to introduce the claim construction and the non-infringement, which would be prejudicial and confusing to the jury. The district court was assuming that the evidence would be unduly prejudicial to TecSec, but TecSec never stated that if the evidence were admitted, it would drop the inducement claim for the post-March 3, 2011 period. The district court should have let TecSec determine whether the prejudice was too severe to be tried. Additionally, Adobe did not cite any authority that supports such foreclosure of liability. The district court also did not consider the totality of TecSec's post-March 3, 2011 inducement evidence to determine whether that issue could be fairly tried.
Accordingly, the Federal Circuit reversed the district court’s decision that excluded evidence of inducement of infringement after March 3, 2011 and evidence of related testimony.
Realtime Data LLC v. Reduxio Sys., Inc., Case No. 19-2198 (Fed. Cir. Oct. 23, 2020)
The district court found all 159 claims patent ineligible through an oral bench ruling and did not issue a written opinion. The Federal Circuit vacated the ineligibility ruling, finding the district court's treatment of a complex and close legal issue was too cursory to allow for meaningful appellate review. The court remanded to the district court for it to give additional consideration on the eligibility question.
Particularly, the Federal Circuit was concerned with four shortcomings in the district court's decisions: (1) an improper focus on factual questions that are unsuitable for resolution at the pleading stage and a failure to evaluate the claims as a whole; (2) the process of answering the "directed to" question of Alice step 1 was unclear, including failure to identify a representative claim; (3) failure to address the opinions of other courts that found similar claims patent eligible; and (4) failure to distinguish Federal Circuit cases that are analogous to this one.
In re Nitro Fluids LLC, Case No. 20-142 (Fed. Cir. Oct. 28, 2020)
The Federal Circuit held that the district court abused its discretion in denying a motion to transfer. In 2018, Cameron International Corporation filed an infringement suit against Nitro Fluids in the Southern District of Texas. Cameron later asserted two related patents against Nitro in the Western District of Texas.
Nitro moved the Western District court to decline jurisdiction or transfer the action under the first-to-file rule because the two cases substantially overlapped. The district court denied Nitro's motions based on Fifth Circuit precedent holding that even where cases overlapped, balancing the traditional transfer factors can preclude application of the rule. The district court held that administrative difficulties flowing from court congestion and Cameron's co-pending suit against another defendant involving the same patents weighed against transfer.
The Federal Circuit panel granted Nitro's mandamus petition for two reasons. First the district court's determination that the first-to-file rule is only applicable when the balance of factors favors the first-filed court was contrary to law. Unless the filer shows that balance of transfer factors favors keeping the case in the second-filed court, there should be no exception. Second, the district court's erroneous assessment of the two factors weighing against transfer warranted additional proceedings. Its reasoning on court congestion failed to assess whether there was an appreciable difference in docket congestion between the two forums. Moreover, the district court's analysis of judicial economy and speed of resolution contravened the premium the first-to-file rule places on allowing one court to resolve substantially overlapping cases and did not consider the availability of multi-district procedures.
The Federal Circuit vacated the district court's order and directed it to conduct a renewed transfer analysis.
