Source: http://www.jdsupra.com/post/documentViewer.aspx?fid=cb8cd761-ebdd-4ddc-970b-0348ccefef01
Timestamp: 2017-08-22 12:20:49
Document Index: 408855008

Matched Legal Cases: ['§ 102', '§ 29', '§ 102', '§ 29', '§ 29', '§ 6', '§ 102', '§ 102', '§ 102', '§ 13', '§ 26', '§ 102', '§ 287', '§ 30', '§ 22', '§ 22', '§ 22', '§ 287', '§ 23', '§ 30', '§ 44', '§ 23', '§ 102', '§ 102', '§ 102']

LATIMER,MAYBERRY &MATTHEWS IP LAW, LLP (www.latimerIP.com) pHPATENT HAPPENIINGS during November 2007 (Part II) A publication by LATIMER,MAYBERRY &MATTHEWS IP LAW, LLP on judicial, legislative, and administrative developments in patent law. HIGHLIGHTS 1. En banc rehearing on various aspects of design patent infringement ordered ............................... 1 2. Alleged prosecution disclaimer was ambiguous, and therefore nonlimiting, where it resulted in an inoperable system .......................................... 2 3. Function described as something that “must” be done limited claim scope to structure requiring that function........................................................ 2 4. Failure to show prior invention worked for its intended purpose defeated § 102(g) anticipation challenge............................................................. 3 5. Replacing “ball bearings” with “curved members” was impermissible new matter supporting a written description rejection ......... 3 6. Infringer’s design around attempt defeated willful infringement claim................................... 4 7. Marking product’s packaging may be sufficient when product is a single use product destroyed upon use.............................................................. 4 8. A district court concludes it is improper to render invalidity rulings as part of its order on claim construction .............................................. 5 9. Dispute resolution clause requiring all disputes regarding a patent be mediated or litigated in a specific district court precluded inter partes reexamination in the PTO................................... 5 10.Third party settlement agreement held discoverable by accused infringer since it had relevance to patentee’s lost profit claim............. 5 11.Accused infringer’s efforts to supplement original declaratory judgment complaint with newly issued patents to create a first-to-file status rejected over patentee’s infringement suit 6 12.Attorney argument did not constitute sufficiently egregious conduct necessary for relief under the fraud provisions of Rule 60(b)............................ 6 JUDICIAL HAPPENINGS En Banc Hearing on Design Patent Infringement On November 26, 2007, the Federal Circuit ordered an en banc rehearing in Egyptian Goddess, Inc. v. Swisa, Inc., No. 2006-1526, 2007 WL 4179111 (Fed. Cir. Nov. 26, 2007), to address several significant issues regarding the legal tests for determining design patent infringement.1 Specifically, the court ordered the parties to address the following issues: 1) Should “point of novelty” be a test for infringement of design patent?[2] 2) If so, (a) should the court adopt the non-trivial advance test adopted by the panel majority in this case; (b) should the point of novelty test be part of the patentee’s burden on infringement or should it be an available defense; (c) should a design patentee, in defining a point of novelty, be permitted to divide closely related or ornamentally integrated features of the patented design to match features contained in an accused design; (d) should it be permissible to find more than one “point of novelty” in a patented design; and (e) should the overall appearance of a design be permitted to be a point of novelty? 3) Should claim construction apply to design patents, and, if so, what role should that construction play in the infringement analysis? The en banc order does not appear likely to disturb 1 A summary of the underlying opinion, Egyptian Goddess, Inc. v. Swisa, Inc., 498 F.3d 1354 (Fed. Cir. Aug, 29, 2007), can be found in the August 2007, Part II issue of Patent Happenings (available in the “Publication” section of the firm’s website). 2 Given that the Supreme Court effectively applied a “point of novelty test” in Smith v. Whitman Saddle Co., 148 U.S. 674, 682 (1893), it seems unlikely that the Federal Circuit could totally eliminate the point of novelty test. See generally, Robert A. Matthews, Jr., 4 ANNOTATED PATENT DIGEST § 29:58 Case Origin of the Point of Novelty Test [hereinafter APD]. pHPATENT HAPPENINGSduringovemb207(at) A publication by LATIMER, MAYBERRY & MATTHEWS IP LAW, LLP and developments HIGHLIGHTS 1. En bane rehearing on various aspects of design JUDICIAL HAPPENINGS patent infringement ordered ... 1 Patent Infringement 2. Alleged prosecution disclaimer was ambiguous, On November 26, and therefore nonlimiting, where it resulted in 2007, the Federal Circuit ordered an en bane rehearing in Egyptian Goddess, an inoperable system ... 2 Swisa, 2006-4179111 3. Function described as something that "must" be (Fed. Cir. Nov. 26, 2007), to address several signifcant done limited claim scope to structure requiring regarding that function ... 2 infringement.' Specifically, the court ordered 4. Failure to show prior invention worked for its the following issues: intended purpose defeated § 102(g) anticipation Should "novelty" be a test for challenge ... 3 of design patent? 5. Replacing "ball bearings" with "curved E221) so, non-trivial members " was impermissible new matter test adopted by the panel majority supporting a written description rejection ... 3 (b) should the point of 6. Infringer's design around attempt defeated patentee's burden on infringement willful infringement claim ... 4 an available defense; should a design product's packaging may, suficient in defning a point of novelty, be when product is a single use product destroyed closely related ornamentally upon use ... 4 8. A district court concludes it is improper to be to fnd "render invalidity rulings as part of its order on novelty" a patented design; should claim construction ... 5 of 9. Dispute resolution clause requiring all disputes regarding a patent be mediated or litigated in a 3) Should claim construction apply to design specifc district court precluded inter partes so, what role should that reexamination in the PTO ... 5 analysis? 10. Third party settlement agreement held bane not appear likely discoverable by accused infringer since it had patentee's claim ... 5 ' A summary of the underlying opinion, Egyptian Goddess, v. 11.Accused infringer's eforts to supplement original declaratory judgment complaint with issue patents to create a frst-to-fle "Publication" frm's website). status rejected over patentee's infringement suit 6 Court effectively applied a "test" Smith v. Whitman Saddle 12.Attornei, argument did not constitute suficiently seems egregious conduct necessary for relief under the the See generally, Robert fraud provisions of Rule 60(b) ... 6 Jr., 4 ANNOTATED DIGEST § 29:58 Case Origin of [hereinafer LATIMER, MAYBERRY & MATTHEWS IP LAW, Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=cb8cd761-ebdd-4ddc-970b-0348ccefef01Patent Happenings Page 2 of 7 November 2007, Part II LATIMER,MAYBERRY &MATTHEWS IP LAW, LLP (www.latimerIP.com) the jurisprudence associated with the ordinary observer test under Gorham Co. v. White, 81 U.S. 511 (1871).3 Nonetheless, the anticipated en banc decision will likely have a significant impact on all future litigations involving issues of design patent infringement. Inoperable Prosecution Disclaimer The Federal Circuit considered once again the binding impact of erroneous statements by a patent attorney present in the prosecution history in Elbex Video, Ltd. v. Sensormatic Elecs. Corp., No. 2007-1097, 2007 WL 4180138, *5-*6 (Fed. Cir. 2007).4 The district court applied a narrow construction to a claimed “receiving means” based on its view that a statement in the file history limited the scope of the claim. Specifically, the court held that a statement that a camera generated a signal that was received by a monitor operated as a prosecution disclaimer to limit the claimed “receiving means” to a monitor. Based on this limiting construction, the district court granted summary judgment of noninfringement because the accused product did not have a monitor receive the camera signal. Relying on the principle that prosecution statements showing an obvious mistake should not create a disclaimer, the Federal Circuit ruled that the district court erred in limiting the scope of the claim. To support its ruling that the statement was an obvious mistake that did not result in a disclaimer, the Federal Circuit noted that the “statement in the prosecution history [wa]s unsupported by even a shred of evidence from the specification.” The court also ruled that while the statement in isolation may have suggested a disclaimer, the totality of the prosecution history rendered the statement ambiguous, and therefore legally incapable of supporting a prosecution disclaimer. Third, the court noted that one of skill in the art when reading the entire specification and prosecution history would realize that the statement was a mistake since “if taken literally [it] would result in an inoperable system.” Thus, the court concluded that “[o]n this unique amalgamation of facts, including (1) the absence of support in the specification or drawings for a monitor that receives code signals from and returns code signals to the cameras; (2) the ambiguity created by other statements in the same prosecution document; (3) the fact that Sensormatic’s 3 See generally APD §§ 29:42 – 29:57. 4 For other cases on this issue see APD Part III, E. Patent Attorney’s Erroneous Statements, §§ 6:40-6:42. own technical witness did not understand how the system would operate consistent with the erroneous statement; and (4) the inoperability of a device constructed in accordance with the incorrect statement, . . . this is not a case of prosecution disclaimer.” Using Inherent Critical Function to Limit Claim Stumbo v. Eastman Outdoors, Inc., No. 2007-1186, 2007 WL 4180137 (Fed. Cir. Nov. 28, 2007), provides an example of the dangers of using the word “must” in a specification. In that case, the Federal Circuit affirmed a limiting claim construction and resulting summary judgment of noninfringement in view of a flexing function that the specification stated “must” be done. More specifically, the asserted claims were directed to a foldable tent-like hunting shelter. The dispute focused on a claim limitation directed to the opening of the shelter, which the claim recited as being a “closable vertical opening.” The district court construed the limitation as requiring a vertically oriented slit-like opening. The accused product had a triangular shaped zipped opening. The Federal Circuit agreed with the district court that in view of the specification, the claims were limited to a slit-like opening. The court noted that the specification stated the supporting poles in the shelter must be flexed to provide sufficient slack for the “closable vertical opening” to open up, and that flexing function therefore meant that the opening had to be a linear slit since any other opening would not requiring the flexing of the support poles. Id. at *3. Hence, the court read into the claim the inherent function of required flexing due to the presence of the term “must” in the specification. Id. at *4. This led to the conclusion that the opening had to be limited to slitlike openings since this was the only type of opening that required flexing to work. After affirming the claim construction, the Federal Circuit further affirmed the summary judgment of no infringement. It found that the patentee’s proffer of expert testimony which only stated in a conclusory fashion that the triangular zipped opening in the accused product was equivalent to the claimed slit-like opening did not raise an issue of fact over the accused infringer’s expert’s detailed showing that the accused product performed its function in a different way to achieve a different result. Specifically, the accused infringer showed that its triangular opening did not require any flexing of the support poles, and therefore operated in a different way. Further, it noted that the triangular opening achieved greater safety and greater with not understand the U.S. 511 (1871).3 operate the erroneous the anticipated en bane will the inoperability a device signifcant statement, issues of prosecution disclaimer." Inherent Critical to Limit considered the Stumbo v. Eastman Outdoors, Inc., No. 2007-1186, of erroneous statements patent 28, in Elbex of of using the word "must" Video, Ltd. v. Sensormatic Elecs. Corp., No. 2007-specification. that case, the Federal Circuit WL 6 (Fed. 2007).4 claim construction and resulting narrow construction to judgment of in view "means" based on its function that the specifcation stated "must" in the fle the scope the More specifcally, the asserted claims were Specifcally, the court held that a statement to like The a signal that on a the a disclaimer to limit "means" Based "closable opening." The district court construction, district court granted the limitation vertically noninfringement because The accused product did receive the triangular shaped zipped opening. The Federal Circuit with the district court that in the Relying on the principle that prosecution specifcation, the were limited slit-showing an The court noted specifcation stated a Circuit in be fexed the scope the suffcient the "closable vertical that the statement opening" to open up, and that flexing function a disclaimer, the Federal to the "statement the prosecution since any other opening would not requiring the wa]s unsupported even of the support 3. Hence, the specifcation." The court also the inherent statement isolation may have suggested due of "must" the the prosecution history the specifcation. Id. at This led to the statement ambiguous, and therefore had to be limited slitlegally incapable of supporting a prosecution like opening the one of skill when reading the entire specifcation and affirming the claim construction, the Federal realize that the statement affrmed the summary since "if taken literally It found that the patentee's system." Thus, the court concluded stated a conclusory "[n this unique triangular the absence of specifcation product was equivalent to the claimed slit-that receives over the accused signals to the cameras; the infringer's expert's detailed showing that the accused other statements the same its function in that Sensormatic's a Specifcally, the accused of the support poles, and 3 generally APD -4For on APD E. Patent in a different Further, noted that Attorney's Erroneous Statements, triangular opening achieved greater safety and greater LATIMER, MAYBERRY & MATTHEWS IP LAW, Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=cb8cd761-ebdd-4ddc-970b-0348ccefef01Patent Happenings Page 3 of 7 November 2007, Part II LATIMER,MAYBERRY &MATTHEWS IP LAW, LLP (www.latimerIP.com) ease of use than the slit-like opening, and therefore did not perform the same result. The patentee argued that safety performance and ease of use were not claimed, and therefore the alleged differences in safety and ease of use should not be relevant to the function-way-result analysis. The Federal Circuit disagreed. It held that while “the function-way-result test focuses on ‘an examination of the claim and the explanation of it found in the written description of the patent.’ . . . this, of course, does not mean that discussion of the equivalence of the function, way, or result between a claimed invention and an accused product is irrelevant when the claims and specification of a patent are silent on the subject. When the claims and specification of a patent are silent as to the result of a claim limitation, as they are in the ’338 patent, we should turn to the ordinarily skilled artisan.” Id. at *5. Because one of skill would consider the safety and ease of use of an opening to be a relevant aspect of its performance, the court held that safety and ease of use were relevant considerations to the analysis of infringement under the doctrine of equivalents even though the patent specification was silent as to these two aspects.5 Id. § 102(g) Anticipation In z4 Technologies, Inc. v. Microsoft Corp., No. 2006-1638, 2007 WL 3407175, *9-* 11 (Fed. Cir. Nov. 16, 2007), the Federal Circuit rejected an accused infringer’s argument that an alleged prior invention anticipated the infringed patent claims under § 102(g)(2) because the accused infringer failed to show the prior invention worked for its intended purpose. The patentee, z4 Technologies, had sued Microsoft for including an anti-piracy feature in its software products that z4 asserted infringed its patent. Microsoft contended that a prior art anti-piracy feature found in earlier software products invalidated the asserted claims under § 102(g). The Federal Circuit instructed that to prove an actual reduction to practice it must be proven that: (1) the purported inventor constructed an embodiment or performed a process that met all the limitations and (2) the inventor had determined that the invention would work for its intended purpose.6 Id. at *9. Agreeing with z4, the court held that the record contained substantial evidence for a reasonable jury to conclude that the anti-5 See also APD § 13:48 Alleged Equivalent Provides Advantages or Better Results than Claimed Element. 6 See generally APD § 26:38 Reduction to Practice Must Show Invention Meets Intended Purpose. piracy feature of the prior art software did not work for its intended purpose of reducing software piracy. The court noted that Microsoft documents showed that Microsoft itself opted not to use the alleged prior invention in its own software. Additionally, internal emails, which Microsoft had improperly withheld during discovery, reported that more than five months after z4’s filing date, the alleged prior invention still had problems and failed to prevent one copy of software from being installed on 40 different machines. Id. at * 10. The court found that collectively the foregoing provided sufficient evidence for the jury to properly conclude that the alleged prior invention did not work to reduce software piracy, and therefore did not constitute an actual reduction to practice. The Federal Circuit also rejected Microsoft’s contention that the jury should have been instructed that when an accused infringer offers prior art that was not considered by the PTO, its burden of proving invalidity is more easily carried than if the PTO had considered the prior art. Id. at *12. New Matter and Written Description Rejection The Federal Circuit affirmed a PTO’s written description/new matter rejection in In re Lew, No. 2007-1196, 2007 WL 4201279, *3-*4 (Fed. Cir. Nov. 29, 2007) (nonprecedential). There, the applicant’s original specification disclosed the use of ball bearings in claims directed to a wheel hub clutch for bicycles. Initially, the examiner issued a statutory double patenting rejection. To overcome the double patenting rejection, the applicant submitted a substitute specification in which it replaced the term “ball bearings” with the term “curved members” in the claims and specification even though the original specification never disclosed the use of “curved members.” Noting that the applicant did not contest that the term “curved members” is broader than “ball bearings,” the Federal Circuit affirmed the rejection of the new claims for lack of an adequate written description since the original specification did not describe the broader concept of using curved members. The applicant argued that because “ball bearings” inherently contained “curved members,” it allegedly had the right to claim the broader concept of “curved members.” Rejecting that argument, the Federal Circuit stated that “[its] case law offers no support for such a broad rule.” Instead, the Federal Circuit held that “the Board properly framed the question as whether Lew’s disclosure of only ‘ball bearings’ is sufficient, in light of the initial disclosure, for a person of than the slit-The patentee its intended purpose of reducing sofware piracy. The of Microsof documents showed that safety and ease use the alleged to the function-internal eanalysis. held mails, Microsoft had improperly withheld "the function-way-test focuses `an fve months of of z4'date, patent.' and failed to course, mean that discussion the machines. of result between at that collectively the suffcient for to reduce to the result of claim as the '338 the Federal also rejected Microsof's artisan." 5. Because should have been instructed would consider the safety infringer not considered by the PTO, its burden of proving safety and ease use were relevant is more easily the PTO had prior Id. at * equivalents though the patent specifcation was silent as to these aspects.5 Circuit affrmed PTO's written new matter rejection in In No. In z4 Technologies, Inc. v. Mcrosoft Corp., No. 2007 WL *29, 2007) There, the applicant's 16, 2007), the Federal Circuit rejected an accused specifcation disclosed the use bearings infringer's invention bicycles. infringed patent claims under the examiner issued a statutory double the infringer patenting rejection. To overcome the double patenting invention its intended applicant submitted a substitute purpose. The patentee, z4 Technologies, had sued specifcation in replaced term "ball including an anti-bearings" with "curved members" the patent. specifcation original contended specifcation the "curved earlier software products invalidated the members." Noting that the applicant not contest claims under § 102(g). "members" "bearings," Circuit must be proven that: the purported inventor claims lack of an adequate written since the original specifcation the limitations and the inventor had that the invention would work because "bearings" intended purpose.6 Id. at *9. Agreeing with z4, the "members," allegedly held that the record contained substantial the broader "jury members." Rejecting that argument, the Federal "[case rule." Instead, 5See also Equivalent Provides Advantages "the Board properly framed the question as 6See generally Show Lew's `bearings' Meets Intended Purpose. of the initial disclosure, for a person LATIMER, MAYBERRY & MATTHEWS IP LAW, Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=cb8cd761-ebdd-4ddc-970b-0348ccefef01Patent Happenings Page 4 of 7 November 2007, Part II LATIMER,MAYBERRY &MATTHEWS IP LAW, LLP (www.latimerIP.com) of ordinary skill in the art to have determined that Lew was in possession, as of the initial filing date, of using any ‘curved member’ in place of the ball bearings.” It then found that nothing in the original written description suggested that the disclosure of using “ball bearings” was just one example of a more broadly disclosed invention. Accordingly, the court ruled that the specification only supported the use of spherical ball bearings and did not support the broader concept of using any curved member. Design Around Defeats Willful Infringement Relying on an infringer’s efforts to design around the asserted patent, the district court in Rhino Associates, L.P. v. Berg Mfg. and Sales Corp., 2007 WL 3490165, *4 (M.D. Pa. Nov. 14, 2007), denied a patentee’s request for enhanced damages. The court held that the infringer’s attempt, after reading the patent, to make a two-piece version of the patent’s onepiece component showed that the infringer “did not act with ‘an objectively high likelihood that its actions constituted infringement of a valid patent.’” Accordingly, the court found that the patentee had “not demonstrated objective recklessness by [the infringer]” and therefore, enhanced damages were not warranted under Seagate.7 Marking Product’s Packaging Heraeus Electro-Nite Co. v. Midwest Instrument Co., Inc., 2007 WL 3407128, *3-*5 (E.D. Pa. Nov. 14, 2007), addresses the issue of when a patentee can mark a patented product’s package without marking the product itself and still comply with the marking statute of 35 U.S.C. § 287(a).8 In that case, the patent covered probes inserted into molten steel and thereby were destroyed upon their use. The accused infringer moved for summary judgment that the patentee’s failure to mark its probes with the patent number, while placing other markings on the probes, showed that the patentee failed to comply with the marking statute. The court denied the motion. Distinguishing over the cases which ruled that marking a package, but not the product, was insufficient to comply with the marking statute, the court noted that in those cases the products continued to exist long after the packaging material was discarded. With the probes at issue, however, the probes were destroyed upon us. Additionally, the 7 In re Seagate Technology, 497 F.3d 1360, 1370-71 (Fed. Cir. 2007) (en banc). 8 See generally, APD § 30:141 Physically Marking the Product or Package. patentee presented evidence that the industry custom was to mark packages, and not the probes. Under these circumstances, the court ruled that it could not conclude as a matter of law that marking the packaging material, and not the probes, failed to provide sufficient constructive notice of the patent and comply with the marking statute. Invalidity Rulings During Claim Construction After previously ruling, as part of its claim construction order, that some of the asserted claims were invalid for lack of an adequate written description, the district court in Tuna Processors, Inc. v. Hawaii Intern. Seafood, Inc., 2007 WL 4104014, *1-*2 (D. Hawai'i Nov. 15, 2007), granted the patentee’s request for reconsideration and vacated its invalidity ruling. The court concluded that by holding the claims invalid as part of its claim-construction order, the court had erred by not giving the patentee a full opportunity to respond to the invalidity contention or to require that the accused infringer prove invalidity by clear and convincing evidence. The court noted that “in addressing the validity issue in the context of claims construction, the Court did not allow the parties the same opportunity to present facts that would have been afforded them in a summary judgment proceeding.” It rejected the accused infringer’s contention that the court’s invalidity ruling could be supported as an exercise of the right to grant summary judgment sua sponte because the Court did “not believe that the parties were given adequate time to develop necessary facts, or to make the sorts of arguments that would have been raised in a summary judgment proceeding.” While vacating the invalidity ruling, the court did note that the accused infringer could still challenge the validity of the claim on written description grounds in a later-filed motion for summary judgment. In a second case decided a few days later, the same district court in Kowalski v. Ocean Duke Corp., 2007 WL 4104259, *3 (D. Hawai'i Nov. 19, 2007), refused to consider whether a claim was invalid for indefiniteness as part of its claim-construction order.9 9 Compliance with the written description requirement is a question of fact, APD § 22:8. It requires assessing how one of skill in the art would understand what the specification discloses, APD § 22.14, and, generally, whether the specification shows that the inventor possessed the claimed invention as of the application filing date, APD § 22.23. Accordingly, factual questions may arise on written description issues that may not be addressed in a claim construction proceeding making a ruling on these issues during claim construction improper. In contrast, indefiniteness is “a legal in the art to have evidence that as of the initial filing `member' in of the ball bearings." the court ruled that it not that nothing in the original written matter of that the disclosure of using "the probes, failed to provide bearings" more broadly invention. the the statute. specifcation only supported use spherical bearings not support the broader concept Rulings previously part of its claim the asserted Around Willful invalid for lack of an adequate written infringer's efforts to design around description, the district court in Tuna Processors, Inc. asserted patent, the in Rhino Seafood, Associates, L.P. v. Berg Mfg. and Sales Corp., 2007 *2 (D. Hawai'i Nov. 15, 2007), granted the patentee's 3490165, (M.D. Pa. 14, 2007), denied its patentee's for damages. The court concluded infringer's attempt, afer reading the construction patent's one-by a full piece that the infringer "invalidity `an objectively likelihood that its actions infringer prove invalidity clear and a valid patent."' evidence. noted that "in the court found that the patentee "the validity in objective by [the infringer]" the Court did the parties the opportunity under Seagate.' judgment proceeding." Product's Packaging infringer's the court's ruling could be supported an Heraeus Electro-Nite Co. v. Mdwest Instrument of to grant summary judgment sua E.Pa. the Court did "the of adequate develop necessary patented product's the make the sorts arguments with the marking statute in proceeding." of 35 U.S.C. § 287(a).8 the steel and thereby were accused challenge the infringer of the claim on written description summary patentee's summary the probes, the patentee the The Kowalski v. Ocean Distinguishing over the cases 4104259, (D. Hawai'i Nov. 19, 2007), refused that marking a package, the consider whether a claim was invalid for construction order.9 insuffcient the marking those cases to afer the packaging material with written description requirement is a the probes at issue, It requires assessing of upon us. Additionally, the understand specifcation the the claimed invention as of the application filing 7In re Seagate Technology, Accordingly, factual questions arise 2007) (en banc). addressed in 8See generally, APD making on these issues In contrast, "LATIMER, MAYBERRY & MATTHEWS IP LAW, Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=cb8cd761-ebdd-4ddc-970b-0348ccefef01Patent Happenings Page 5 of 7 November 2007, Part II LATIMER,MAYBERRY &MATTHEWS IP LAW, LLP (www.latimerIP.com) Dispute Resolution Clause Barred Reexamination Judge Robinson of the United States District Court for the District of Delaware held in Callaway Golf Co. v. Acushnet Co., 2007 WL 4115789, *12-* 13 (D. Del. Nov. 20, 2007), that by filing an inter partes reexamination proceeding in the PTO, the defendant breached a prior agreement relating to the patents that were the subject of the reexamination. In the case, the accused infringer’s predecessor had settled a patent dispute with the plaintiff patentee. The agreement settling the dispute contained a Dispute Resolution clause, which provided that the “sole and exclusive procedure” to resolve all disputes regarding the patents at issue was in accordance with terms set forth in the agreement. These terms included mandatory negotiations and mediation and the possibility of initiating legal proceedings in United States District Court for the District of Delaware. No other form of dispute resolution was allowed. Despite the agreement, the accused infringer filed an inter partes reexamination proceeding in the PTO. The patentee petitioned the PTO to vacate the reexamination proceeding in view of the accused infringer’s breach of the Dispute Resolution clause. The PTO refused the patentee’s request. It determined that the “(1) plaintiff cited no authority for the proposition that private parties may abrogate the PTO’s statutory jurisdiction to conduct and decide the merits of a request for inter partes reexamination; (2) ‘a contractual provision preventing a party from seeking reexamination would be void as contrary to public policy’ allowing licensees to challenge the validity of patents; (3) the Agreement was executed prior to the enactment of the statute authorizing inter partes reexamination, ‘[t]hus it was not even possible for the Agreement to address preventing a party to the Agreement from filing such a request for reexamination’; (4) there was no indication that the reexamination was ordered contrary to a statutory prohibition or due to clerical error; and (5) Congress did not provide for an ‘estoppel’ arising out of a settlement or other contractual agreement between parties.” Consequently, the PTO concluded that the conclusion that is drawn from the court’s performance of its duty as the construer of patent claims. ” All Dental Prodx, LLC v. Advantage Dental Prods., Inc., 309 F.3d 774, 778 (Fed. Cir. 2002). As a legal question based on claim construction, indefiniteness challenges appear to be appropriate for resolution during the claim construction phase of the case. Indeed, other “courts have shown a willingness to hear and decide summary judgment motions that a claim term is indefinite simultaneously with the claim-construction proceeding.” § APD § 23.21 (collecting cases). public interest of resolving the substantial new question of patentability required that the reexamination proceed. Judge Robinson held that once the PTO determined that a substantial new question of patentability existed, “the PTO was clearly within its jurisdiction” to deny the patentee’s request to dismiss the reexamination proceedings. But she also ruled “the court owe[d] no deference to the PTO’s interpretation of the legal effect of the Agreement or, more generally, the legality of a provision that purports to prevent parties from filing inter partes reexaminations.” Comparing the Dispute Resolution clause to a forum selection clause, she ruled that “the parties have not contracted away their rights to contest the validity of each other’s patents, but have agreed to do so before a court, rather than before the PTO.” Since the accused infringer failed to present “a compelling reason not to honor the parties’ choice of forum for their patent disputes,” Judge Robinson found that the defendant violated the Agreement by filing the inter partes reexaminations to contest the validity of the patents. While granting the patentee summary judgment that the accused infringer had breached the agreement, the court did not specify what remedy, if any, would be awarded. Third Party Settlement Agreement Discoverable While various legal rules often make third-party settlement agreements irrelevant and nondiscoverable10, the district court held in Abbott Diabetes Care Inc. v. Roche Diagnostics Corp., 2007 WL 4166030, *2-*3 (N.D. Cal. Nov. 19, 2007), that portions of a settlement agreement a patentee had with a third party were discoverable since they had relevance to the issue of lost profits. Specifically, after an in camera inspection of the agreement, the court ruled that agreement could provide evidence as to whether the third party became licensed under the asserted patents such that its products became acceptable noninfringing substitutes whose existence could impact the patentee’s lost profit claim. The court further held that use of the settlement agreement in this way did not run afoul of Fed. R. Evid. 408. Nor, did the confidentiality interest of the third party and patentee, and the federal policy of encouraging settlements, trump the accused infringer’s need for the 10 See generally, APD § 30:95—Rate Proposed in Settlement Negotiations Maybe Inadmissible and Irrelevant and § 44:93 Settlement Negotiations Under Rule 408. Barred interest resolving the substantial new of District of patentability required that the Delaware Co. 4115789, * that once the PTO Nov. 20, 2007), that by filing an inter partes that substantial new question of reexamination proceeding in the PTO, the defendant "jurisdiction" to deny the patentee's request dismiss In the case, "infringer's predecessor patent court owe[d] no deference to the PTO's interpretation plaintiff patentee. The agreement dispute contained Dispute Resolution a provision that purports to prevent which "sole and exclusive filing inter partes reexaminations." procedure" disputes regarding the patents to with forth she ruled "terms included mandatory away their rights to the validity and mediation and the other's initiating legal proceedings in United States District PTO." Since the accused to present "a compelling reason was allowed. the parties' of their patent the accused infringer fled partes disputes," the defendant reexamination proceeding in the PTO. The patentee by fling the inter partes petitioned the PTO to vacate the reexamination to the of the patents. infringer's of While granting the patentee summary judgment that The PTO refused had breached agreement, patentee's request. It that the "(1) plaintiff be authority the proposition that private the PTO's statutory jurisdiction Party Settlement Agreement decide the merits of for partes reexamination; `contractual provision various rules often make third-seeking nonbe to public policy' allowing licensees discoverable10, the district court held Abbott patents; Diabetes Care Inc. v. Roche Diagnostics Corp., 2007 prior the enactment the statute 4166030, (N.D. partes reexamination, `[was a settlement had with even possible the Agreement to address third party were discoverable since they had from to the issue of lost profts. Specifically, afer for reexamination'; camera the agreement, reexamination contrary to agreement prohibition party became licensed the Congress did not provide for an `estoppel' arising out patents such its products became agreement substitutes whose existence parties." Consequently, PTO concluded patentee's lost proft way did not run afoul of Fed. R. Evid. 408. Nor, did court's as of party and of claims. " Dental Prodx, v. and of encouraging a legal question based on claim construction, indefiniteness trump infringer's to be appropriate for resolution "hear and 10 95 Settlement indefnite simultaneously the claim-construction Irrelevant and proceeding." § 23.21 (collecting cases). LATIMER, MAYBERRY & MATTHEWS IP LAW, Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=cb8cd761-ebdd-4ddc-970b-0348ccefef01Patent Happenings Page 6 of 7 November 2007, Part II LATIMER,MAYBERRY &MATTHEWS IP LAW, LLP (www.latimerIP.com) discovery. Accordingly, the court ruled that “[i]n this instance, Abbott’s and LifeScan’s confidentiality interests must yield to disclosure of at least those portions of the settlement agreement that are directly relevant to lost profits claim.” First-To-File Battles In Abbott Labs. v. Johnson and Johnson, Inc., 2007 WL 4184349, *4 (D. Del. Nov. 28, 2007), the district court rejected an accused infringer’s attempt to create a favorable “first-to-file” situation by seeking to supplement an original declaratory judgment complaint with claims directed to newly issued patents. On the day that the new patents issued, the patentee filed electronically an infringement action in a different forum at 12:01 am. A few minutes later, the accused infringer had electronically filed in the forum a motion to supplement its original declaratory judgment complaint with claims directed to the new patents. At 8:30 that morning it also filed a second separate declaratory judgment on the new patents (local rules precluded the accused infringer from filing the second action before 8:30 am). The accused infringer argued that its original declaratory judgment should be supplemented or in the alternative that its second action should be consolidated with the original declaratory judgment action and treated as a first-filed action to the patentee’s suit. The court disagreed. Noting that no patent rights exist until the new patents actually issue, the district court rejected the accused infringer’s argument that the new patents were “inextricably intertwined” with the patents that formed the subject matter of the original declaratory judgment complaint or that the infringement allegations based on the new patents should be deemed to “relate back” to the filing of the original declaratory judgment complaint. The court concluded that even though the new “patents are continuations to two of the patents originally named in the 06-613 action, and the same product (the Xience V stent) is at issue with respect to each of these patents, [that] does not overcome the fact that jurisdiction did not exist with respect to any of the continuation patents until their issuance.” Consequently, it ruled that in this race to the court house the “true plaintiff,” the patentee, had to prevail. The court explained: “Even if [the patentee]’s 12:01 a.m. filing of the first New Jersey action were to be considered the functional equivalent of [the accused infringer]’s 8:30 a.m. filing of the 07-259 action in this district (and the court declines to find a ‘dead heat’ in this instance), the winner of this race to the court house is the true plaintiff, not the declaratory judgment plaintiff, as this court respects the choices made by plaintiffs in choosing this state as a forum and must, therefore, respect their choice of a different forum.” Attorney Argument Was Not Fraud on the Court Affirming a summary judgment dismissing a patentee’s Rule 60(b) motion seeking to overturn an invalidity judgment, the Federal Circuit held in Apotex Corp. v. Merck & Co., Inc., No. 2006-1405, 2007 WL 3407197 (Fed. Cir. Nov. 16, 2007), that attorney argument based on the inferences to be drawn from the record evidence did not constitute sufficiently egregious conduct necessary for relief under the fraud provisions of Rule 60(b). In the challenged judgment, the accused infringer had succeeded in proving that its earlier work was § 102(g) prior art that anticipated the patentee’s claims. The patentee contended in its Rule 60(b) motion that the accused infringer’s attorneys had committed a fraud on the district court in presenting their arguments for § 102(g) anticipation. Noting that the “fraud” needed to set aside a judgment under Rule 60(b) “is typically limited to egregious events such as bribery of a judge or juror or improper influence exerted on the court,” id. at *3, the Federal Circuit agreed with the district court that the attorney argument presented by the accused infringer did not rise to this level of “fraud.” The Federal Circuit also agreed with the district court “that if some aspect of Merck’s witness presentation or attorney argument at the trial had been defective or over-stated, then Apotex should have challenged it with contrary evidence and argument at the trial.” Id. at *4. Given that the “evidence that was adduced and argument presented at the trial d[id] not establish corruption of the judicial process,” the Federal Circuit affirmed the summary judgment dismissing the Rule 60(b) motion. Id. at *5. The Federal Circuit also affirmed the district court’s denial of the patentee’s motion to compel discovery of privileged material based on the patentee’s assertion that the crime-fraud exception applied to waive the accused infringer’s attorney-client privilege. The court instructed that the party seeking to pierce the privilege under the crime-fraud exception “must make a prima facie showing of some foundation for the asserted fraud.” Id. at *5. Since the alleged fraud was “simply attorney argument as to the inferences to be drawn from the evidence,” and the patentee failed to show falsity in the arguments, the Federal Circuit held that the district court correctly ruled that the patentee failed to show a prima facie case "[the true plaintiff, not the declaratory judgment Abbott's LifeScan's confdentiality as this court respects the choices must yield disclosure at least those in choosing this state as forum and must, the settlement their choice of a different forum." claim." Affirming a summary judgment dismissing a In Abbott Labs. v. Johnson and Johnson, Inc., 2007 patentee's Rule b) 28, judgment, infringer's 2006-"to-fle" situation by seeking to Nov. attorney supplement an original declaratory judgment complaint on the inferences to drawn issued evidence not constitute suffciently the new patents issued, patentee for relief an action in different In the challenged judgment, A few minutes later, the accused infringer in proving fled the art that anticipated supplement original declaratory judgment patentee's The patentee patents. infringer's attorneys 8:30 that morning it also filed a second separate court in presenting rules their arguments for § 102(g) anticipation. Noting that infringer from fling the second "fraud" needed set The accused argued "is typically limited to egregious events such as its original declaratory judgment should be a judge or juror or improper influence or in alternative its second on the court," the Federal consolidated with original with district court that the attorney action and treated as a frst-fled by the infringer patentee's The court disagreed. "fraud." The Federal Circuit also Noting that no patent rights exist until the new patents with "some court rejected the accused Merck's witness presentation infringer's new patents were "intertwined" with the patents it contrary evidence at the trial." the allegations based "was adduced to "back" not establish filing of the original declaratory judgment process," the Circuit affrmed the summary The court concluded that even though judgment dismissing the Rule 60(b) motion. Id. at *5. "to the patents district named the 06-613 action, and the same court's the patentee's compel stent) respect privileged material based on the [patentee's that crime-exception respect infringer's issuance." The court instructed that the it ruled that in the court under the crime-fraud exception the "plaintiff," the patentee, ""[the patentee]'12:01 the asserted fraud." Since the alleged m. the frst New Jersey action were be "simply attorney argument as the the [the accused to the evidence," the infringer]'s fling of the 07-259 failed in the arguments, to fnd `heat' Circuit court correctly race case LATIMER, MAYBERRY & MATTHEWS IP LAW, Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=cb8cd761-ebdd-4ddc-970b-0348ccefef01Patent Happenings Page 7 of 7 November 2007, Part II LATIMER,MAYBERRY &MATTHEWS IP LAW, LLP (www.latimerIP.com) of fraud, and correctly upheld the privilege. Id. 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MAYBERRY & MATTHEWS IP LAW, LLP, an "AV®" rated law firm, provides legal services to corporations and law firms in the area of U.S. patent law including: consulting services for patent infringement litigation; patent application and prosecution services; investigation, counsel issues of patent infringement, validity, and enforceability; patent licensing and portfolio management. Our attorneys have years of dedicated experience in patent litigation and procurement, and have authored numerous articles and publications on the subject, including the seven-volume patent-law treatise Annotated Patent Digest, available on Westlaw. We maintain For questions regarding the content of Patent Happenings or the Annotated Patent Digest, please contact Robert A. Matthews, Jr. (434.525.1141; robert.matthews@latimerlP.com). 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