Source: https://www.schwabe.com/newsroom-publications-13900
Timestamp: 2019-04-26 02:18:04+00:00

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Microsoft – The Ninth Circuit affirms a judgment against Motorola Mobility relating to Motorola's unsuccessful attempts to get Microsoft to pay substantial patent royalties for sales of its Xbox system and mobile phones. The rulings point out how, virtually every step of the way, Motorola handled the assertion of its wifi and video coding patents inappropriately, from demanding a high royalty rate, to filing infringement actions against Microsoft in foreign jurisdictions. The panel affirms the ruling of Judge Robart of the Western District of Washington which determined an appropriate reasonable and non-discriminatory (RAND) royalty rate, the first case that actually decided what a RAND rate should be.
Versata II - In this follow up decision to its July 9 ruling holding that Versata's claims are invalid under § 101 (Versata I), the Circuit throws out Versata's suit against the PTO for its decision to institute a covered business method (CBM) review of Versata's patent. The panel holds that AIA's express language bars court jurisdiction over the PTAB's decision to institute patent reexamination proceedings. This decision complements other recent Circuit decisions holding that there is no right to appeal initiation of CBM reviews and IPRs.
POSCO - The Circuit vacates a district court order modifying a protective order to permit foreign courts to access documents produced in litigation in the U.S. even though those documents might be relevant to the foreign litigation. The majority ruled that the court should have looked to 28 U.S.C. § 1782 and the Supreme Court's decision in Intel v. AMD requiring that the court consider, among other factors, whether the requested production is "unduly intrusive." Instead, the district court had looked to Pansey, a Third Circuit case holding that when a party seeks to modify a protective order, the court should balance the parties' interests.
Circuit Check – A jury rendered a general verdict finding two patents directed to circuit board testers to be willfully infringed and not invalid. Defendant had alleged that prior art rock carving techniques and the like rendered the claims obvious and the judge granted JMOL on that basis, ruling that any layman could have understood that the claimed invention could be made using those prior art techniques. The Circuit reverses, holding that "any layman could have understood" was not the proper standard and, since it was a general verdict, the jury must have determined that the art was not within the scope of the prior art under Graham v. Deere. Substantial evidence also supports the jury's presumed findings that objective considerations existed to support nonobviousness.
Airbus – The Circuit determines that the PTAB erred because it premised its dismissal of Airbus's cross-‎appeal on the examiner's decision not ‎to consider Airbus's proposed rejections because of a lack ‎of a ‎substantial new question of patentability. But, once ‎the Director ordered inter partes reexamination, it ‎was 37 CFR § 1.948(a), not a determination of a substantial new ‎question of patentability, that governed ‎the limitations on ‎Airbus's submission of prior art. Thus, the examiner ‎erred in evaluating the two pieces of prior art submitted by Airbus for a substantial new question of ‎patentability, when his evaluation should have been conducted under 37 CFR § 1.948(a)(2).
This appeal began at the Federal Circuit but was transferred to the Ninth Circuit in May of 2014 because the case was considered a licensing dispute rather than a patent infringement case. A unanimous panel of the Ninth Circuit affirms judgment in favor of Microsoft in an action brought by Microsoft alleging that Motorola breached its obligation to offer reasonable and non-discriminatory ("RAND") licenses to certain of its patents. At issue in the appeal were two patent portfolios that were subject to RAND agreements. The court previously upheld, in an interlocutory appeal, an anti-suit injunction preventing Motorola from enforcing in a German action any injunction it might obtain against Microsoft's use of certain contested patents. Following that prior decision, a jury determined that Motorola had breached its RAND good faith and fair dealing obligations in its dealings with Microsoft.
Judge James Robart of the Western District of Washington conducted a bench trial to determine a RAND rate and range for Motorola's patents. In a ruling that was the first of its kind, Judge Robart decided an appropriate rate was 4 cents per unit and not the 2.25% proposed by Motorola, which worked out to be $1.8 million due instead of $4 billion. The case then proceeded to a jury trial on the breach of contract claim, and the jury returned a verdict for Microsoft in the amount of $14.5 million.
The panel rejects Motorola's two challenges to the RAND bench trial, specifically, that the district court lacked the legal authority to decide the RAND rate issue in a bench trial, and that the RAND rate analysis was contrary to Federal Circuit precedent. First, the panel determines that Motorola never withdrew its consent to a bench trial. Second, the panel holds that the district court's RAND analysis did not violate Federal Circuit patent damages law because this was not a patent law action. In fact, the district court's analysis properly adapted the Federal Circuit's patent law methodology as guidance in this contract case concerning the questions of patent valuation.
Concerning the denial of Motorola's motion for judgment as a matter of law, the panel rejects Motorola's two challenges to the damages sought for attorneys' fees and litigation costs incurred in defending the injunctive actions. First, Motorola raised the Noerr-Pennington doctrine, which shields individuals from, inter alia, liability for engaging in litigation. The panel notes that the doctrine does not immunize a party from actions that amount to a breach of contract. Moreover, enforcing a contractual commitment to refrain from litigation does not violate the First Amendment. The panel further notes that the jury concluded that seeking injunctive relief violated Motorola's contractual RAND obligations. The Noerr-Pennington doctrine did not immunize Motorola from liability for that breach of its promise. Second, Motorola alleged that Microsoft was not entitled to attorneys' fees as damages under Washington law. Where, as here, a party's injunctive actions to enforce a RAND-encumbered patent violated the duty of good faith and fair dealing, Washington courts allow the damages awarded to include the attorneys' fees and costs expended to defend against the injunction action.
Finally, the panel rejects Motorola's allegations that the district court erred in making evidentiary rulings, one of which permitted admission of evidence of an FTC investigation into Motorola' s enforcement policies, including its seeking of injunctions. The panel holds that the court did not abuse its discretion in admitting the evidence because the danger of prejudice in admitting limited testimony about the FTC investigation did not so manifestly outweigh the testimony's probative value.
In 2007 Versata sued SAP for infringement of the '350 patent. Versata won almost $400 million at trial, and the Circuit affirmed but vacated the injunction as overbroad, and remanded for further proceedings. Meanwhile, in 2012, SAP petitioned the PTO to institute a CBM review of the '350 patent; and the PTAB granted SAP's petition.
While the PTAB was conducting its CBM review, Versata sued the PTO in the E. D. of Virginia, seeking to set aside the decision to institute CBM review. SAP intervened and on August 7, 2013, the district court granted the PTO's and SAP's motions to dismiss for lack of subject matter jurisdiction and failure to state a claim, ruling that the AIA's express language, detailed structure and scheme for administrative and judicial review evinces Congress's clear intent to preclude subject matter jurisdiction over the PTAB's decision to institute such proceedings. The court also held that the decision to institute post-grant review is merely an initial step in the PTAB's process to resolve the ultimate question of patent validity, not a final agency action, and Versata retains an adequate remedy through appeal to the Federal Circuit.
As we explain in Versata I, 35 U.S.C. § 324 contains the review bar at issue, subsection 324(e), which provides that "[t]he determination [by the PTAB] whether to institute a post-grant review under this section shall be final and nonappealable." Although at the time the district court ruled it did not have the benefit of our views—the decision was made before we had addressed the issue—we recently have acknowledged the statutory limits of judicial review of decisions to institute in CBM cases. See VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307 (Fed. Cir. 2014), Benefit Funding Sys. LLC v. Advance Am. Cash Advance Ctrs. Inc., 767 F.3d 1383 (Fed. Cir. 2014); GTNX, Inc. v. INTTRA, Inc., 2015 WL 3692319 (Fed. Cir. June 16, 2015). See also cases construing the counterpart provision for inter partes review, § 314(d): St. Jude Med., Cardiology Div., Inc. v. Volcano Corp., 749 F.3d 1373 (Fed. Cir. 2014); In re Dominion Dealer Solutions, LLC, 749 F.3d 1379 (Fed. Cir. 2014); and In re Proctor & Gamble Co., 749 F.3d 1376 (Fed. Cir. 2014).
In Versata I we highlighted the fundamental importance of judicial review of agency action, both as a matter of historic case law as well as of statutory law. The importance of judicial review was recognized by the district court when it noted that an adequate remedy lay in appeal to the Federal Circuit, an appeal expressly provided in the AIA at the final written decision stage. We have thus acknowledged the balance Congress struck between its desire for a prompt and efficient review process at the PTO, on the one hand, and, on the other, the necessary recognition of the traditional role of judicial review of agency action.
Accordingly, since the attempt by Versata to obtain judicial review of the PTAB's decision to institute a CBM review in this case was addressed to the PTAB's determinations at the decision to institute stage, the district court was correct in barring judicial review pursuant to subsection 324(e).
POSCO seeks a writ of mandamus modifying the district court's protective order to allow foreign courts access to petitioners' proprietary information. The Circuit grants the petition and remands the case.
Nippon Steel sued POSCO for patent infringement and unfair competition. The district court entered a protective order prohibiting the cross-use of confidential materials which "shall be used by the receiving Party solely for purposes of the prosecution or defense of this action." Pursuant to the protective order, POSCO produced several million pages containing confidential information.
Nippon Steel also brought suit in Japan against POSCO (based in Korea) for alleged trade secret misappropriation. In response, POSCO filed its own declaratory judgment action in Korea, asserting that it had not stolen Nippon's trade secrets.
Given that discovery in this country's federal court system is more generous than in Japan and Korea, Nippon Steel, attempting to use documents that it would not otherwise be able to obtain through foreign litigation, moved the court to modify its discovery protective order for the purposes of providing foreign counsel proprietary documentation relating to POSCO's manufacturing process.
The court granted the motion, using the balancing framework for modifying discovery orders set forth in Pansy v. Borough of Stroudsburg, 23 F.3d 772 (3d Cir. 1994), a case involving the modification of a protective order to disclose a settlement agreement to U.S. newspapers, and not the provision of documents to foreign courts. Pansy articulated the standard as requiring that courts should balance the interests of the parties to determine whether good cause exists for the order. POSCO filed its request for a writ seeking review under 28 U.S.C. § 1651(a). The order in question turns on claims of confidentiality that raise an important issue of first impression.
For mandamus to be available, (1) "the party seeking issuance of the writ must have no other adequate means to attain the relief he desires"; (2) "the petitioner must satisfy the burden of showing that his right to issuance of the writ is clear and indisputable"; and (3) "the issuing court, in the exercise of its discretion, must be satisfied that the writ is appropriate under the circumstances." We think this petition satisfies that standard because it presents an important and unresolved issue.
The district court … may order [one] to . . . produce a document or other thing for use in a proceeding in a foreign or international tribunal . . . upon the application of any interested person . . . [and unless otherwise specified] the document or other thing [will be] produced in accordance with the Federal Rules of Civil Procedure.
The question before us is the role of § 1782(a) in the context of the Supreme Court's decision in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004), which the district court failed to consider. In Intel, the Court considered the framework under § 1782 for assessing whether to authorize discovery for use in foreign proceedings. It recognized that "comity and parity concerns may be important as touchstones for a district court's exercise of discretion in particular cases," and set forth specific factors as guides for the exercise of district-court discretion, in deciding whether to provide evidence for use in foreign proceedings. As the Seventh Circuit has noted, "the judicial inquiry that the statute requires—is designed for preventing abuses of the right to conduct discovery in a federal district court for use in a foreign court." Heraeus Kulzer, GmbH v. Biomet, Inc., 633 F.3d 591 (7th Cir. 2011).
We agree that § 1782 may not directly govern requests to modify a protective order to make material available in a foreign proceeding—as opposed to direct requests for evidentiary material for use in foreign proceedings pursuant to § 1782. And even as to the latter situation § 1782 is not exclusive since, as the government points out, there are various treaties and alternative mechanisms for securing materials for use in foreign proceedings. But here these other mechanisms appear to be unavailable, and we think that § 1782 still has a role to play when a party seeks to modify a protective order to use previously discovered documents in a foreign proceeding.
Unlike the district court here, at least three district courts have acknowledged that § 1782 and the Intel factors were relevant when a party seeks to modify a protective order to use discovered materials in a pending foreign proceeding. Those factors include: (1) whether "the person from whom discovery is sought is a participant in the foreign proceeding"; (2) "the nature of the foreign tribunal, the character of the proceedings underway abroad, and the receptivity of the foreign government or the court or agency abroad to U.S. federal-court judicial assistance"; (3) "whether the § 1782(a) request conceals an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the United States"; and (4) whether the request is otherwise "unduly intrusive or burdensome . . . ." Intel, 542 U.S. at 264-65. These factors, deemed by Congress to be relevant under § 1782, are not accounted for by the Pansy standard, applied here by the district court.
Thus, while § 1782 may not govern instances in which a party seeks to modify a protective order to allow use of discovered materials in a foreign proceeding, we think that the considerations articulated under § 1782 and Intel are relevant to that issue and must be considered together with other considerations pertinent under Federal Rule of Civil Procedure 26 as articulated in Pansy. Contrary to the concurrence, this is not a situation in which the documents were produced voluntarily, in which case the Intel considerations may be irrelevant. In this case, the district court ordered that the confidentiality order be modified and the materials were originally produced to the district court subject to compulsory process.
We therefore grant mandamus for purposes of directing the district court to conduct the proper assessment giving due consideration to the Intel factors.
While the majority concedes that a §1782 action is not the exclusive means by which a party can obtain documents for use in foreign proceedings, it nevertheless concludes that "the considerations articulated under § 1782" and case law applying it must be considered when determining whether to modify a protective order to permit the use of confidential documents in foreign proceedings. But § 1782 does not and was never intended to apply to situations where the party is already in possession of the documents it seeks to use in the foreign proceeding. And forcing such a requirement on the district court runs afoul of the Third Circuit's well-settled test for modifying protective orders.
Nevertheless, to the extent the district court imposed restrictions on the foreign court's use of documents submitted by parties to this litigation, it violates well-settled comity principles. Mandamus is appropriate for that reason. But I would not go as far as the majority to hold that the district court must consider the Intel factors.
Circuit board testers are used to test circuit boards before the boards are integrated into finished products. Many testers require an interface plate, which is a plastic grid with holes that permit connections between the tester and the circuit board. The asserted claims define methods for applying a second removable marking indicia over a predetermined first indicia to determine which of a plurality of holes are to be populated in the interface plate.
Circuit Check alleged that QXQ's interface plates infringed its patents. QXQ stipulated to infringement and the parties stipulated that three references describing interface plate marking techniques were prior art to the patents (collectively, the "stipulated prior art"). At trial, QXQ argued that three additional references were pertinent—(1) the application of varnish to rocks and then scraped off to make designs; (2) engraved signage, in which the top layer of a multi-layer product is removed to expose a bottom layer; and (3) a machining technique whereby Prussion Blue dye is applied to a workpiece and then removed (collectively, the "disputed prior art"). Circuit Check argued that the references were not analogous and presented testimony that a skilled artisan at the time of the invention would not have considered the disputed prior art pertinent to the marking problem.
Circuit Check stipulated to infringement and validity was submitted to the jury, which found the asserted claims not invalid for obviousness. The jury also found that the infringement was willful and awarded damages.
After the jury verdict, QXQ filed a motion for judgment as a matter of law that the asserted claims are invalid as obvious. The district court granted QXQ's motion, acknowledging that QXQ's obviousness argument was not premised on citing specific examples of prior art in the applicable field, nor did it rely on nuanced discussion about the level of ordinary skill in that particular field. It found that although there was no doubt that rock carvings were not technically pertinent to the field of circuit testers, and witnesses credibly testified that Prussian Blue dye had not been used on alignment plates, "any layman" would have understood that interface plates could be marked using the techniques described in the disputed prior art. The court further noted that "any vandal who has 'keyed' a car knows that stripping the paint with a key will result in the underlying metal color showing through." It found that none of the objective considerations affected its conclusion. With respect to claims 5 and 11, the court determined that even though QXQ did not present evidence that the additional limitations of the claims would have been obvious, those added limitations were too trivial to support nonobviousness.
A patent is invalid for obviousness "if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains." 35 U. S. C. § 103(a) (2006)."Obviousness is a question of law based on underlying factual findings . . ." Kinetic Concepts, Inc. v. Smith & Nephew, Inc., 688 F.3d 1342 (Fed. Cir. 2012). The underlying factual inquiries include: (1) the scope and content of the prior art, (2) the differences between the prior art and the claims at issue, (3) the level of ordinary skill in the art, and (4) any relevant objective considerations, such as commercial success, long felt but unsolved needs, and the failure of others. Graham v. John Deere Co., 383 U.S. 1 (1966).
By finding the claims nonobvious, the jury presumably found that the disputed prior art is not analogous and therefore not within the scope of the prior art. Substantial evidence supports the jury's presumed finding. To be considered within the prior art for purposes of the obviousness analysis, a reference must be analogous. Whether a reference is analogous art is a question of fact. Prior art is analogous if it is from the same field of endeavor or if it is reasonably pertinent to the particular problem the inventor is trying to solve.
The disputed prior art—rock carvings, engraved signage, and Prussian Blue—is not part of the field of circuit board testers and test figures. Therefore, the disputed prior art can be analogous only if it is reasonably pertinent to the particular problem solved by the inventor. Although "familiar items may have obvious uses beyond their primary purposes," KSR Int'l Co. v. Teleflex, Inc., 550 U.S. 398 (2007), a reference is only reasonably pertinent when it logically would have commended itself to an inventor's attention in considering his problem. The jury heard testimony that a person of ordinary skill in the art would not have thought about rock carvings, engraved signage, or Prussian Blue in considering how to mark interface plates. The jury was entitled to weigh this testimony, find that an ordinarily skilled artisan would not find that the disputed prior art "logically would have commended itself to an inventor's attention," and thus find the disputed prior art not analogous.
Just because keying a car, for example, is within the common knowledge of humankind does not mean that keying a car is analogous art. The question is not whether simple concepts such as rock carvings, engraved signage, or Prussian Blue dye are within the knowledge of lay people or even within the knowledge of a person of ordinary skill in the art. Rather, the question is whether an inventor would look to this particular art to solve the particular problem at hand. Here, Circuit Check put forward evidence that an inventor would not have considered the disputed prior art when trying to improve marking. It is not hard to arrive at that conclusion. Because the jury's presumed finding that the disputed references are not analogous is supported by substantial evidence, the only references within the scope of the prior art are the stipulated prior art.
Substantial evidence also supports the jury's presumed finding that the differences between the stipulated prior art and the claims were significant, and that objective considerations existed to support nonobviousness. Because the jury rendered a general verdict that the claims were not obvious, we must presume that they found in favor of Circuit Check on all relevant questions supported by substantial evidence, including objective considerations of copying, long-felt need, commercial success, skepticism, and unexpected results. Under these circumstances, a reasonable jury could have concluded that the subject matter as a whole would not have been obvious at the time of the invention. The court erred by granting judgment as a matter of law.
Finally, the court erred by invalidating dependent claims 5 and 11. Although the court acknowledged that QXQ presented no evidence that the additional limitations in those claims were present in the prior art and presented no evidence that the additional limitations were trivial, it concluded that these claims were obvious because Circuit Check did not explain why the additional limitations rendered the claims nonobvious. The court erred in shifting the burden of production to disprove invalidity. "Each claim of a patent . . . shall be presumed valid independently of the validity of other claims; dependent or multiple dependent claims shall be presumed valid even though dependent upon an invalid claim." 35 U.S.C. § 282. Although "in many cases a person of ordinary skill will be able to fit the teachings of multiple patents together like pieces of a puzzle," there must be evidence presented on the obviousness of the claim as a whole. KSR, 550 U.S. at 420.
Firepass sued Airbus for infringement of the ‘752 patent directed to the use of hypoxic compositions for preventing and extinguishing fires. Airbus requested inter partes reexamination, arguing that certain claims were anticipated under 35 U.S.C. § 102. The PTO granted Airbus's request in part, finding that the prior art presented a substantial new question of patentability. The examiner ultimately rejected claims under 35 U.S.C. § 112, for lack of written description. The Board reversed, finding that the claims were supported by an adequate written description, and dismissed Airbus's cross-appeal relating to the same claims, finding that "the statutory authority for third-party requester appeals is . . . expressly limited to the review of examiner final decisions that are ‘favorable to the patentability' of a claim," and that determination of a lack of a substantial new question of patentability is not a favorable decision on patentability.
The Circuit rules that the PTAB erred here because it premised its dismissal of Airbus's cross-appeal on the examiner's decision not ‎to consider Airbus's proposed rejections because of a lack ‎of a substantial new question of patentability. But, once ‎the Director ordered inter partes reexamination, it was‎ 37 CFR § 1.948(a)‎, not a determination of a substantial new ‎question of patentability, that governed the limitations on ‎Airbus's submission of prior art. Thus, the Examiner ‎erred in evaluating Knight and AFWAL 2060, the two pieces of prior art submitted by Airbus, for a substantial new question of patentability, when his evaluation should have been conducted under ‎37 CFR § 1.948(a)(2)‎.
The Biologics Price Competition and Innovation Act of 2009 ("BPCIA") is a component of Obamacare and provides, for the first time, an abbreviated pathway for FDA approval of so-called "biosimilar" drugs, generic versions of biologic drugs. The Act contains litigation provisions that have come to be termed the "patent dance" that prescribe how the parties decide which patents will be litigated during the time prior to FDA approval.
In a split decision, with two partically concurring and partially dissenting opinions, a majority of the panel upholds Sandoz's position that the "patent dance" is a voluntary process that biosimilar applicants may want to take part in. Specifically, the Circuit affirmed the dismissal of Amgen's ‎state law claims of unfair competition and conversion ‎because Sandoz did not ‎violate the information-disclosure and notice-of- ‎commercial-marketing provisions of the BPCIA, respectively codified at 42 U.S.C. § 262(l)(2)(A) and (l)(8)(A). ‎) As part of that ruling, the majority also granted judgment on the pleadings to Sandoz on its ‎counterclaims seeking a declaratory judgment ‎that it ‎correctly interpreted the BPCIA. The majority also upholds Amgen's position that a biosimilar applicant's notice to the holder of the reference product of an ‎intention to begin commercial marketing in 180 days can occur only after the biosimilar is ‎licensed.
The case arose over Amgen's drug Neupogen® that was the subject of a biosimilar application by Sandoz for a drug to be sold as Zarxio®. Sandoz argued it did not have to comply with the provision of the law that states that the biosimilar applicant "shall" provide to the reference product sponsor a copy of its application and also manufacturing information so that patents related to manufacturing may be resolved expediently between the parties. Sandoz contended that despite using the word "shall," Congress did not intend to make these disclosures mandatory because the BPCIA provides remedies for reference product sponsors faced with nondisclosure from the biosimilar applicant. The district court and now a majority of the Circuit sided with Sandoz in its interpretation of the law, that these remedy provisions indicate that, taken as a whole, the law does not force the biosimilar applicant to make these disclosures.
Also at issue was whether the biosimilar applicant needed to provide 180 day notice to the reference product sponsor that it intended to enter the marketplace. Sandoz provided this notice prior to obtaining FDA approval, and the panel agrees with Amgen that the law does not permit marketing notice until after a biosimilar applicant has received FDA approval. Consequently, Sandoz, having received FDA approval on March 5, 2015, and under this aspect of the decision, will be to start marketing Zarxio®‎on September 2nd.

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