Current Developments
in U.S. Patent Law
Fordham IP Institute: 2C. U.S. Patent Law
Dimitrios T. Drivas
April 8, 2015
U.S. Supreme Court
35 U.S.C. § 285, Exceptional Case Standard
for Award – Octane Fitness v. ICON
Octane Fitness LLC v. ICON Health & Fitness, Inc., 134 S.Ct. 1749 (2014)

Decided April 29, 2014 (opinion by Sotomayor, 9-0)
35 U.S.C. § 285

“The court in exceptional cases may award reasonable attorney fees to the prevailing
party.”

Federal Circuit Test:
–
Litigation involves (1) “material inappropriate conduct” or (2) “objectively baseless”
and brought in “subjective bad faith.”
Federal Circuit decision, 469 F. App’x 57 (Fed. Cir. 2012)

Affirmed district court, 2011 WL 3900975 (D. Minn. Sept. 6, 2011), that litigation was
not objectively baseless and not brought in bad faith.

“No reason to revisit the settled standard for exceptionality.” 469 F. App’x at 65.
2
35 U.S.C. § 285, Exceptional Case Standard
for Award – Octane Fitness v. ICON
Question Presented

Does the Federal Circuit’s promulgation of a rigid and exclusive two-part test for
determining whether a case is “exceptional” under 35 U.S.C. § 285 improperly
appropriate a district court’s discretionary authority to award attorney fees to prevailing
accused infringers in contravention of statutory intent and this Court’s precedent,
thereby raising the standard for accused infringers (but not patentees) to recoup fees
and encouraging patent plaintiffs to bring spurious patent cases to cause competitive
harm or coerce unwarranted settlements from defendants?
Supreme Court Decision (9-0) (reversed and remanded)

An “exceptional case” is one that “stands out from others with respect to the
substantive strength of a party’s litigating position” or “the unreasonable manner in
which the case was litigated.”

District courts have case-by-case discretion to determine whether a case is
“exceptional” and should consider the totality of the circumstances.

Burden of proof to show entitlement to fees is not by clear and convincing evidence.
3
35 U.S.C. § 285, Standard of Review –
Highmark v. Allcare
Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S.Ct. 1744 (2014)

Decided April 29, 2014 (same day as Octane)
Question Presented

Whether a district court’s exceptional-case finding under 35 U.S.C. § 285, based on its
judgment that a suit is objectively baseless, is entitled to deference.
Holding:

Appellate court should apply abuse-of-discretion standard in reviewing all aspects of a
district court’s § 285 determination.

§ 285 inquiry is “rooted in factual determinations.”

Opinion by Sotomayor, 9-0 (vacated and remanded).
4
Indefiniteness – Nautilus v. Biosig
Nautilus, Inc. v. Biosig Instruments, Inc., 134 S.Ct. 2120 (2014)

Decided June 2, 2014 (opinion by Ginsburg, 9-0)
Federal Circuit Decision, 715 F.3d 891 (Fed. Cir. 2013)

Reversed district court judgment of indefiniteness.

Claim term “spaced relationship,” which refers to the space between the common and
live electrodes in a heart rate monitor, was not “insolubly ambiguous.”

“[C]laim language, specification, and the figures illustrating the ‘spaced relationship’
between the live and common electrodes are telling and provide sufficient clarity to
skilled artisans as to the bounds of this disputed term.” 715 F.3d at 899.

Rehearing en banc denied; cert granted on Jan. 10, 2014.
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Indefiniteness – Nautilus v. Biosig
Questions Presented

Does the Federal Circuit’s acceptance of ambiguous patent claims with multiple
reasonable interpretations – so long as the ambiguity is not “insoluble” by a court –
defeat the statutory requirement of particular and distinct patent claiming?

Does the presumption of validity dilute the requirement of particular and distinct patent
claiming?
Supreme Court Decision (9-0)

A patent is invalid for indefiniteness if its claims, read in light of the specification and
prosecution history, fail to inform, with reasonable certainty, those skilled in the art
about the scope of the invention.

Overturns “insolubly ambiguous” and “amenable to construction” standard.

Remanded to Federal Circuit.
6
35 U.S.C. § 271(b), Induced Infringement –
Limelight v. Akamai
Limelight Networks, Inc. v. Akamai Techs., Inc., 134 S.Ct. 2111 (2014)

Decided June 2, 2014 (opinion by Alito, 9-0)
35 U.S.C. § 271(b)

“Whoever actively induces infringement of a patent shall be liable as an infringer.”
Claims at Issue

Method of delivering web content.

Some steps of method claim performed by Limelight, others by its customers.
Federal Circuit Decision, 692 F.3d 1301 (Fed. Cir. 2012) (en banc) (6-5)

Limelight found liable under § 271(b) where Limelight performed some steps of the
method and induced others to practice remaining steps.

Patentee no longer must show direct infringement by a single entity to prove induced
infringement.
7
35 U.S.C. § 271(b), Induced Infringement –
Limelight v. Akamai
Question Presented

Whether the Federal Circuit erred in holding that a defendant may be held liable for
inducing patent infringement under 35 U.S.C. § 271(b) even though no one entity has
committed direct infringement under 35 U.S.C. § 271(a).
Supreme Court Decision (9-0) (reversed and remanded)

An alleged infringer is not liable for inducing infringement pursuant to 35 U.S.C. §
271(b) if no party has directly infringed.

Performance of all steps must be attributable to single entity for direct infringement.

Declines to review Muniauction rule for direct infringement.
Federal Circuit on Remand

Rejected Akamai’s request that Federal Circuit decide en banc the issue of direct, joint
infringement pursuant to 35 U.S.C. § 271(a).

3-panel Federal Circuit heard oral arguments in September 2014.
8
Patentable Subject Matter –
Alice Corp. v. CLS Bank Int’l
Alice Corp. v. CLS Bank Int’l, 134 S.Ct. 2347 (2014)

Decided June 19, 2014 (opinion by Thomas, 9-0)
Patents-at-Issue

Claims to computer implemented system, medium, and a method for reducing
“settlement risk” in financial transactions.
Federal Circuit rehearing decision, 717 F.3d 1269 (Fed. Cir. 2013) (en banc)

Divided court (7-3) affirmed district court and reversed Federal Circuit panel decision.

Asserted method and computer-readable media claims and system claims were not
directed to patent-eligible subject matter under 35 U.S.C. § 101.

Question Presented: Whether claims to computer-implemented inventions – including
claims to systems and machines, processes, and items of manufacture – are directed
to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted
by this Court?
9
Patentable Subject Matter –
Alice Corp. v. CLS Bank Int’l
Supreme Court Decision (9-0) (affirmed)

Because the claims are drawn to ineligible abstract idea, they are not patent eligible
under 35 U.S.C. § 101.

Supreme Court Test: (1) determine whether the claims at issue are directed to a
patent-ineligible concept; and (2) if so, determine whether claim’s elements,
considered both individually and as an ordered combination, transform the nature of
the claim into a patent-eligible application.

(1) The abstract idea of mitigating settlement risk is a patent-ineligible concept; and (2)
the method claims which merely require generic computer implementation is not
enough to transform the abstract idea into patent-eligible invention.
Federal Circuit applied Alice at least 5 times in 2014 to invalidate patents under §
101, including Ultramercial v. Hulu, 772 F.3d 709; buySAFE v. Google, 765 F.3d
1350; Content Extraction v. Wells Fargo, 776 F.3d 1343; BRCA1 & BRCA2 v. Ambry
Genetics Corp., 774 F.3d 755; and Planet Bingo v. VKGS, 576 Fed. Appx. 1005

Upheld patent under Alice test only once (DDR Holdings, LLC v. Hotels.com, L.P., 773
10
F.3d 1245)
Appellate Deference to Claim Construction –
Teva v. Sandoz
Teva Pharms. USA, Inc. v. Sandoz, Inc., 135 S.Ct. 831 (2014)

Decided Jan. 20, 2015 (opinion by Breyer, 7-2)
Federal Circuit decision, 723 F.3d 1363 (Fed. Cir. 2013)

Reversed district court claim construction.

Patent invalid as indefinite; “average molecular weight” is insolubly ambiguous,
despite district court factual findings that a person of ordinary skill would have
understood the claim term.

Denied rehearing en banc.
Federal Rule of Civil Procedure 52(a)(6)

“Findings of fact, […] must not be set aside unless clearly erroneous […]”
11
Appellate Deference to Claim Construction –
Teva v. Sandoz
Question Presented

Whether a district court’s factual findings in support of its construction of a patent
claim term may be reviewed de novo, as the Federal Circuit requires (and as the panel
explicitly did in this case), or only for clear error, as Rule 52(a) requires.
Supreme Court Decision (7-2) (reversed and remanded)

Federal Circuit must apply a clear error (not de novo) standard of review for district
court’s subsidiary factual findings on claim construction.

District judge after deciding factual dispute will interpret claims in light of the facts.
Ultimate interpretation is a legal conclusion – reviewed de novo.

If district court reviews only intrinsic evidence – de novo review.
Dissent (by Thomas, joined by Alito)

Claim construction does not involve findings of fact and thus, FRCP 52(a)(6) does not
apply and the proper standard of review is de novo.

A patent is like a statute rather than a contract.
12
Defense to Induced Infringement –
Commil v. Cisco
Commil USA, LLC v. Cisco Sys., Inc., No. 13-896

Cert. petition granted Dec. 5, 2014 (oral argument March 31, 2015)
Federal Circuit decision, 720 F.3d 1361 (Fed. Cir. 2013) (2-1)

Global-Tech Appliances Inc. v. SEB S.A., 131 S. Ct. 2060 (2011) requires knowledge
that induced acts constitute infringement for liability under 35 U.S.C. § 271(b) (actual
knowledge or willful blindness).

Evidence of good faith belief in invalidity may negate requisite intent.

Rehearing en banc denied, 737 F.3d 699 (Fed. Cir. 2013) (6-5).
Question Presented

Whether a defendant’s belief that a patent is invalid is a defense to induced
infringement under 35 U.S.C. § 271(b).
13
Royalties Post-Patent’s Expiration Date –
Kimble v. Marvel
Kimble v. Marvel Enters. Inc., No. 13-720

Cert. petition granted Dec. 12, 2014 (oral argument March 31, 2015)
9th Circuit decision, 727 F.3d 856 (9th Cir. 2013)

Royalty provision in settlement agreement held unenforceable after expiration of
patent because there was only one royalty rate for both patent and non-patent rights.

Applied Brulotte v. Thys Co., 379 U.S. 29 (1964): any contract requiring royalty
payments for an invention after patent expires or when it fails to issue is
unenforceable unless contract provides a discount from the patent-protected rate.

Brulotte extends to “hybrid licensing agreement” (i.e., agreements with inseparable
patent and non-patent rights).
Question Presented

Whether a patentee’s use of a royalty agreement that projects beyond the expiration
date of the patent is unlawful per se.
14
Federal Circuit
15
Induced Infringement – Suprema v. ITC
(en banc)
Suprema, Inc. v. Int’l Trade Comm’n, No. 12-1170
ITC Exclusion and Cease and Desist Order, Inv. No. 337-TA-720, 2011 WL 8883591
(Nov. 10, 2011)

Baring importation of optical scanning devices.
Background

Patent-in-suit claims methods of finger print imaging and capturing.

Accused products are imported scanners that only infringe when used with
domestically developed software, but have substantial non-infringing uses.
16
Induced Infringement – Suprema v. ITC
(en banc)
Federal Circuit decision, 742 F.3d 1350 (Fed. Cir. 2013)

ITC exclusion order based on violation of Tariff Act may not be predicated on a theory
of induced infringement in which direct infringement does not occur until after
importation of the articles that the exclusion order would bar.

ITC authority under Section 337 of the Tariff Act “reaches ‘articles that . . . infringe a
valid and enforceable United States patent’ at the time of importation.” 742 F.3d at
1352.
Federal Circuit grants petition for rehearing en banc, 2014 U.S. App. LEXIS 10124
(Fed. Cir. May 13, 2014)

Question presented: Whether the ITC has authority under 19 U.S.C. § 1337 to issue
exclusionary orders to remedy induced infringement of method claims where the direct
infringement does not occur until after the article is imported into the United States.

Oral arguments held on Feb. 5, 2015.
17
Laches Defense (damages) – SCA Hygiene
v. First Quality Baby Products (en banc)
SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC, No. 13-1564
35 U.S.C. § 286

Except as otherwise provided by law, no recovery shall be had for any infringement
committed more than six years prior to the filing of the complaint or counterclaim for
infringement in the action.
Federal Circuit decision, 767 F.3d 1339 (Fed. Cir. Sept. 17, 2014)

Affirms summary judgment of laches, applying Aukerman.

Presumption of laches based on more than six-year delay:
–
Knowledge of infringing activity in 2003, ex parte reexamination proceedings 2004
– 2008, lawsuit filed in 2010.

Presumption not rebutted by patentee.
18
Laches Defense (damages) – SCA Hygiene
v. First Quality Baby Products (en banc)
Petition for rehearing en banc granted on Dec. 30, 2014:

In light of the Supreme Court’s decision in Petrella v. Metro-Goldwyn-Mayer, 134 S.Ct.
1962 (2014) (and considering any relevant differences between copyright and patent
law), should this Court’s en banc decision in A.C. Aukerman Co. v. R.L. Chaides
Constr. Co., 960 F.2d 1020 (Fed. Cir. 1992) be overruled so that the defense of laches
is not applicable to bar a claim for damages based on patent infringement occurring
within the six-year damages limitation period established by 35 U.S.C. § 286?

In light of the fact that there is no statute of limitations for claims of patent infringement
and in view of Supreme Court precedent, should the defense of laches be available
under some circumstances to bar an entire infringement suit for either damages or
injunctive relief?
Same laches issue presented in Reese v. Sprint Nextel Corp., No. 2:13-cv-03811ODW, 2014 U.S. Dist. LEXIS 101978 (C.D. Cal. July 24, 2014).
19
Obviousness in View of Unexpected Results
– Bristol-Myers Squibb v. Teva
Bristol-Myers Squibb Co. v. Teva Pharms. USA, Inc., No. 13-1306
Federal Circuit decision, 752 F.3d 967 (Fed. Cir. June 12, 2014)

Baraclude® (entecavir) used in the treatment of hepatitis B.

Panel affirms summary judgment of obviousness in view of structurally similar prior art
compound – prima facie obvious.

No error in selection of lead compound despite later-discovered evidence of toxicity.
Rehearing en banc denied (7-4), 769 F.3d 1339 (Fed. Cir. Oct. 29, 2014)

Dyk & Wallach: “This decision properly does not allow consideration of post-invention
evidence in the circumstances of this case.”

Newman, Lourie, Reyna, Taranto dissent from denial of petition.

O’Malley: decision “does not foreclose” use of post-invention evidence.
Cert petition filed Jan. 20, 2015 (No. 14-886)

Question Presented: Should courts consider post-filing evidence showing the actual
differences between a patented invention and the prior art?
20
Joinder of Parties – STC v. Intel
STC.UNM v. Intel Corp., No. 13-1214
Federal Rule of Civil Procedure 19(a)

Involuntary joinder rule in which a party must be joined.
Federal Circuit decision (2-1), 754 F.3d 940 (Fed. Cir. June 6, 2014)

Only one of the co-owners of patent brought infringement suit against alleged
infringer.

Majority: first co-owner lacked standing to bring the infringement claims without
second co-owner voluntarily joining the suit and could not be involuntarily joined
pursuant to Fed. R. Civ. P. 19(a).

“[T]he right of a patent co-owner to impede an infringement suit brought by another coowner is a substantive right that trumps the procedural rule for involuntary joinder
under Rule 19(a).”

Dissent (Newman): Fed. R. Civ. P. 19(a) does apply to co-owners of a patent.
21
Joinder of Parties – STC v. Intel
Rehearing en banc denied (6-4), 767 F.3d 1351 (Fed. Cir. Sep. 17, 2014)

Dyk, Moore, & Taranto: “Rule 19 . . . presupposes the existing parties’ substantive
entitlement to ‘relief’ from another source of law” – however, patent co-owner has no
right to any relief unless the suit is filed with the consent of co-owners.

Newman, Lourie, O’Malley, & Wallach: dissent from denial of petition.

O’Malley: “Rule 19(a) makes no exception for recalcitrant patent owners and we, to
date, have not explained from where such an exception derives.”
Cert petition filed Dec. 16, 2014

Question Presented: Whether Fed. R. Civ. P. 19(a) permits a patent owner to join an
indispensable party to bring an infringement suit.
Cert petition denied March 30, 2015
22
Effect of Claim Amendments –
Vederi v. Google
Vederi, LLC v. Google, Inc., 744 F.3d 1376 (Fed. Cir. 2014)
Federal Circuit decision, 744 F.3d 1376 (Fed. Cir. Mar. 14, 2014)

Reversed district court’s claim construction of “substantially elevations” limitation and
vacated judgment of non-infringement.

District court erred in limiting the construction of “substantially elevations” by not
sufficiently considering the intrinsic evidence in this case.
Cert petition filed Oct. 16, 2014

Question Presented: Whether, when an applicant for a patent amends a claim to
overcome the Patent and Trademark Office’s earlier disallowance of the claim, a court
should (i) presume that the amendment narrowed the claim and strictly construe the
amended claim language against the applicant, as this Court has held; or (ii) presume
that the claim scope remained the same and require that any narrowing be clear and
unmistakable, as the Federal Circuit has held.
23
Solicitor General invited to file brief on Jan. 12, 2015
Obviousness-Type Double Patenting –
Gilead Sciences, Inc. v. Natco Pharma Ltd.
Federal Circuit decision, 753 F.3d 1208 (Fed. Cir. Apr. 22, 2014)

Later-issued but earlier-expiring patent may qualify as a reference for purposes of
obviousness-type double patenting against earlier-issued, later-expiring patent.

Patent expiration dates should control – not issuance dates.

Rader dissent: subsequent patent claims priority to earlier date and expires first, does
not extend the patent term.

Rehearing en banc denied.
Cert filed Nov. 26, 2014

Question Presented: Whether, contrary to this Court’s consistent and longstanding
precedent and Congress’s intent, the double-patenting doctrine can be used to
invalidate a properly issued patent before its statutory term has expired using a
second, later-issuing patent whose term of exclusivity is entirely subsumed within that
first patent’s term?
Cert Petition denied March 9, 2015.
24
Doctrine of Equivalents – Cadence v. Exela
Cadence Pharms. Inc. SCR Pharmatop v. Exela Pharmsci Inc., No. 14-1184, 2014
U.S. App. LEXIS 4700 (Fed. Cir. March 23, 2015)

District court construed claim to require active ingredient be dissolved
before deoxygenation.

Claim vitiation: application of doctrine of equivalents would read an express limitation
out of the claim.

Affirmed district court’s decision that the timing of the addition of the active ingredient
did not matter and the differences between the claimed steps and the allegedly
infringing method were insubstantial.

“‘Vitiation’ is not an exception or threshold determination that forecloses resort to the
doctrine of equivalents, but is instead a legal conclusion of a lack of equivalence
based on the evidence presented and the theory of equivalence asserted.”
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