Source: https://www.schwabe.com/newsroom-publications-13510
Timestamp: 2019-04-26 02:14:28+00:00

Document:
Benefit Funding – In the ‎context of a stay determination, a district court need not and should not ‎analyze whether the PTAB might, at some later date, be ‎determined to have acted outside its authority in instituting and conducting CBM review based on § 101.
The district court concluded that all of the factors strongly favored a stay.
Appellants' argument rests on the ‎premise that the PTAB is not authorized to conduct CBM ‎review based on § 101 grounds. That ‎argument is a ‎collateral attack similar to ones the Circuit recently held impermissible in VirtualAgility, Inc. v. Salesforce.com, 2014 WL 3360806. Allowing such a collateral attack would create serious practical problems, including mini-trials that would overwhelm and dramatically expand the nature of the stay ‎determination. A district court, in the ‎context of a stay determination, need not and should not ‎analyze whether the PTAB might, at some later date, be ‎determined to have acted outside its authority in instituting and conducting the CBM review. This is not to say that a patent ‎owner could never attack the PTAB's authority to conduct ‎CBM review. Indeed, Appellants might potentially challenge that authority in the context of a direct appeal of the PTAB's final decision. They simply cannot ‎mount such a challenge in opposition to a stay.
Having rejected Appellants' sole argument on appeal, ‎the panel concludes that the district court did not abuse its ‎discretion in granting the stay. Further, consistency with ‎established precedent was not at issue in this case and no ‎other compelling reason for a more searching review was ‎presented. Finally, the panel notes that it will not address the ‎underlying merits of that attack, namely whether § 101 is a ‎valid ground for CBM review.
uPI and Richtek are in the ‎business of designing and selling DC-DC controllers, which convert direct current from one voltage to ‎another. Richtek filed a complaint with the ITC, alleging that uPI misappropriated Richtek's trade secrets and infringed Richtek's patents in violation of ‎19 U.S.C. §1337. Shortly before an evidentiary hearing, uPI ‎moved to terminate the investigation by offering to enter into a ‎consent order whereby uPI would cease importation of all ‎products produced using Richtek's trade ‎secrets or infringing Richtek's patents.
The ALJ found that the formerly accused products ‎contained or were produced using Richtek's trade secrets ‎and that the formerly accused products infringed the patents. The ALJ also found that the post-‎Consent Order products infringed the pa‎tents. However, the ALJ found that the post-Consent ‎Order products were not produced using Richtek's trade secrets, due to clean room procedures uPI had implemented.
The full Commission affirmed the ALJ's findings that ‎the formerly accused products were produced using Richtek's trade secrets and that the post-‎Consent Order products were produced without Richtek's ‎trade secrets. The Commission also affirmed the ALJ's ‎finding that uPI's formerly accused products violated the ‎Consent Order with respect to the '190 patent because ‎uPI knowingly aided or abetted the sale or importation of ‎formerly accused products that directly infringe the '190 patent.
uPI objects to any ‎bar under the Consent Order against importation by uPI's customers of products containing infringing DC- ‎DC controllers.‎ uPI cites the Kyocera case for the proposition that, despite its agreement by Consent Or‎der not to knowingly aid, abet or induce importation of ‎products produced using or containing Richtek trade ‎secrets or infringing Richtek patents, because this ‎case was terminated by Consent Order with no general ‎exclusion order, no penalty can be based on importations by ‎non-respondents.‎ Kyocera Wireless Corp. v. International Trade Commission, 545 F.3d 1340 (Fed. Cir. 2008).
The panel finds that substantial evidence supports the Commission's findings that uPI post-Consent Order upstream sales were ‎linked to subsequent downstream U.S. imports ‎or sales of the formerly accused products and that uPI ‎knowingly aided or abetted U.S. imports or sales ‎of the formerly accused products. ‎The Commission relied on spreadsheets produced by ‎uPI showing uPI's purchase order data and sales of formerly accused products to downstream customers after ‎the Consent Order issued. The Commission also relied on testimony by uPI executives that uPI knew the contract manufacturers to ‎whom uPI's distributors sold the formerly accused products, and knew that these contract manufacturers imported downstream products into the U.S..
uPI ‎argues that while the spreadsheet data show the post-‎Consent Order upstream sales and downstream imports ‎of DC-DC controllers identified by the same model numbers, "[i]t is not enough that the chips are the same model number; they must be shown to be the same chips."
uPI also challenges the Commission's finding that ‎uPI's formerly accused products directly infringed the '190 ‎patent. The Commission responds that it did not find that uPI ‎directly infringed the '190 patent, but that uPI violated ‎the Consent Order prohibition on knowingly aiding or ‎abetting the sale or importation into the United States of ‎any DC-DC controllers or products containing same that ‎infringe the '190 patent.
Richtek challenges the Commission's finding that ‎uPI's post-Consent Order controllers are ‎not produced using Richtek trade secrets. The Consent Order prohibits selling ‎or importing, and aiding or abetting the sale or importation, of products that are produced using Richtek trade ‎secrets. uPI does not challenge the finding that its formerly accused ‎products were produced using Richtek trade ‎secrets, but argued to the Commission that its post-‎Consent Order products were independently developed ‎through "clean room" procedures, and did not use the ‎Richtek trade secrets.
Richtek's experts testified to the high degree of similarity and identity between uPI's post-Consent Order ‎products and formerly accused products, compared with ‎Richtek's trade secrets. Richtek witnesses pointed to the ‎many unchanged features of the layouts and the circuitry, ‎including errors therein. The reproduction of design errors, notations and extraneous markings is not consistent with independent development.
In 1996, Honda added the navigation system as an op‎tion for the Acura RL. At the time, Calcar was publishing ‎‎"Quick Tips" guides: booklets with condensed information ‎from a car's owner's manual. During the course of devel‎oping a QuickTips guide for the 96RL, Mr. Obradovich ‎drove the car and operated the navigation system, and ‎Calcar personnel took photographs of the navigation ‎system and owner's manual. Subsequently, Mr. Obra‎dovich began working on the parent application that ‎ultimately issued as one of the patents in suit. The application ‎explicitly referred to the 96RL system as prior art, and ‎Mr. Obradovich acknowledged that the system was used ‎as the basis of Calcar's inventions. Honda alleged that ‎Mr. Obradovich knew that the owner's manual and pho‎tographs were in Calcar's possession and deliberately ‎withheld them during prosecution. Honda argued that ‎the operational details that he did not disclose were ‎precisely those that were claimed in the other patents at ‎issue—the use of the system to display the status of vehicle functions.
The case went to trial and the jury found the '497 patent invalid, but the '465 and '795 patents valid. After the trial ‎the district court ‎granted Honda's inequitable conduct motion and, there‎fore, held the patents at issue unenforceable. Calcar ‎appealed.‎ While the appeal was pending, the Circuit established ‎a revised and narrower test for inequitable conduct in ‎Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d ‎1276 (Fed. Cir. 2011) (en banc). In light of Therasense, the Circuit ‎affirmed the district court's finding of the materiality of the ‎prior art with respect to the '497 patent, and vacated the ‎district court's other determinations of materiality and ‎intent.
Because the district court did not commit clear error ‎in its finding of materiality, the panel affirms the district court's ‎determination that the undisclosed operational details of ‎the 96RL navigation system are material to the patenta‎bility of the patents.
Calcar provided a limited disclosure of the 96RL navi‎gation system in the patents' specification, and it also ‎submitted a New York Times article describing the system ‎during prosecution. As the district found, however, these ‎disclosures exclude material information about the 96RL ‎system, such as the manner in which the prior art system ‎provided notifications to the user and displayed search ‎results. Partial disclosure of material information about the ‎prior art to the PTO cannot absolve a patentee of intent if ‎the disclosure is intentionally selective.
Judge Newman opines in dissent that "the criteria of inequitable conduct ‎are plainly not met.‎" She notes that the only issue is whether Mr. Obradovich committed ‎inequitable conduct by not providing the PTO, when the ‎parent patent application was filed, with the Acura Own‎er's Manual and the photographs that the Calcar employ‎ees took of the Acura display. These materials were ‎provided to the PTO on reexamination of the '497 patent, ‎and patentability was confirmed by the PTO in light of that ‎additional information.‎ In a stinging rebuke to the majority she concludes: "The panel majority ‎distorts the Therasense standards, ignores the PTO ‎reexamination, casts the jury aside, and generally disre‎gards the safeguards that this court adopted en banc."

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