Source: https://www.mwe.com/en/thought-leadership/publications/2000/02/ip-update-volume-3-no-2-february-2000
Timestamp: 2018-12-12 12:40:11
Document Index: 59025022

Matched Legal Cases: ['§103', '§146', '§146', '§ 112', '§285', '§285', '§285']

IP Update, Volume 3, No. 2, February 2000 | Publications | Thought Leadership | McDermott Will and Emery
IP Update, Volume 3, No. 2, February 2000
Patent/Obviousness - Motivation to Combine Prior Art References Requires a Teaching of Desirability, Not Merely Feasibility
Patent/Litigation - Preclusion of Doctrine of Equivalents Based on Pre-Existing Technology Only Applies to Means-Plus-Function Claim Elements
Patent/Interference - Actual Reduction to Practice of a Count in an Interference Requires that Every Element of the Count be Literally Present
Internet - Court Finds that Internet Service Providers Are Not Liable for the Content of Messages Which Pass Through Them
Patent/Litigation - Federal Circuit Upholds Award of Attorneys Fees to Non-Party, Corporate Parent
Copyright/Internet - DMCA Effective in Obstructing DVD Software Pirates
Copyright/Fair Use - Copying of Basic Input-Output System ("BIOS") for Reverse Engineering Is Fair Use
Patent/Obviousness
Motivation to Combine Prior Art References Requires a Teaching of Desirability, Not Merely Feasibility
In connection with an obviousness determination under §103, the required motivation to combine references to teach a feature, which is shown in the prior art to be a "trade-off" with another feature, must also show the feature to be substituted is desirable in terms of the combination urged, not merely feasible. Winner Int’l Royalty Corp. v. Ching-Rong Wang, No. 98-1553 (Fed. Cir. Jan. 27, 2000).
This case arose in the context of a direct appeal from the U.S. Patent and Trademark Office Board of Patent Appeals and Interferences (the "Board") to a district court under 35 U.S.C. §146. The district court overturned the Board’s decision, finding certain claims of U.S. Patent No. 4,935,047 ("the ‘047 patent") and of a divisional application filed to provoke the interference, would not have been obvious over the cited prior art. The Federal Circuit affirmed in a panel opinion written by Judge Michel.
The claims in issue of the ‘047 patent and the divisional application are directed to a steering wheel anti-theft device having a self-locking, ratcheting mechanism. A prior art patent disclosed a steering wheel anti-theft device having a dead-bolt mechanism that was not self-locking, the commercial embodiment of which is known as "The Club." Another prior art patent separately disclosed a self-locking ratcheting mechanism. The Federal Circuit agreed with the district court that one of ordinary skill in the art would not have reasonably elected to trade the benefit of security of the dead-bolt for the convenience of the ratcheting mechanism, and affirmed the district court’s determination of nonobviousness. In doing so, the Federal Circuit held that the prior art teaching of a motivation to combine prior art references which involve a substitution of one trade-off type feature for another (e.g., security vs. convenience) must establish that the combination/substitution urged is desirable, not merely feasible. In an explanatory footnote, the Federal Circuit said:
The fact that the motivating benefit comes at the expense of another benefit, however, should not nullify its use as a basis to modify the disclosure of one reference with the teachings of another. Instead, the benefits, both lost and gained, should be weighed against one another.
Two interesting procedural issues were also addressed by the Federal Circuit. The district court admitted documents and testimony pertaining to the nexus required to show commercial success, specifically a survey and a foundational witness for the survey. Neither this evidence nor the specific issue of nexus were before the Board. The Federal Circuit held that the district court did not abuse its discretion in admitting this evidence even though the nexus issue was not explicitly raised before the Board, finding that it was subsumed in the commercial success issue, which was raised.
Finally, as to the appropriate standard of review by the district court when hearing an appeal in a §146 proceeding, the Federal Circuit confirmed that when the district court admits additional testimony on all issues that were raised before the Board, it becomes the factfinder and therefore must conduct a trial de novo. However, the Federal Circuit specifically reserved opinion as to whether a deferential review standard should apply to those issues on which no additional evidence was admitted during the district court proceedings.
Preclusion of Doctrine of Equivalents Based on Pre-Existing Technology Only Applies to Means-Plus-Function Claim Elements
Infringement under the doctrine of equivalents of structural claim elements is not foreclosed by the fact that the asserted equivalent structure consists of pre-existing technology. Kraft Foods Inc. v. International Trading Co., Case No. 99-1240, (Fed. Cir. 2/14/00).
The patent in suit, U.S. Pat. No. 5,657,873 relates to food packaging. Despite Kraft’s claim differentiation argument, premised on the existence in claim 1 of the '873 patent of a claim element expressly requiring a recited "protecting back panel" to be "relatively stiff," the district court, relying on the written description and prosecution history, found that the term "protecting back panel" as used in claim 2 of the ‘873 patent required a relatively stiff panel. The Federal Circuit agreed, finding that even though different words were used in drafting claim limitations that does not mandate different interpretations of the two limitations; where (as here) every disclosed embodiment that employed a back panel used a "relatively stiff" panel.
The Federal Circuit also affirmed the district court’s finding that ITC’s application of a flexible, pressure-sensitive label to the bottom of more than one tray compartment did not literally infringe the "protecting back panel" limitation, despite Kraft’s contention that ITC’s labels become rigid once they are applied. The Court based this finding on the written description and prosecution history, which demonstrated that the back panels are relatively rigid not merely when adhered to the tray compartments but also beforehand.
On the issue of doctrine of equivalents, the district court held that ITC’s products did not infringe, relying on its understanding that the Federal Circuit decision in Chiuminatta Concrete Concepts Inc. v. Cardinal Industries Inc. precluded a finding of infringement under the doctrine of equivalents whenever the accused variation of the patented invention involves pre-existing technology.
On this issue, the Federal Circuit (Michel, J.) reversed, noting that the rationale for the Chiuminatta holding was premised on the close relationship between equivalence under 35 U.S.C. § 112, ¶6 and under the doctrine of equivalents. Specifically, that litigating the question of infringement under the doctrine of equivalents for pre-existing technology, after holding that such technology did not literally infringe as a structural "equivalent" under Section 112 ¶6, would give the patentee "two bites at the apple." However, the Federal Circuit noted that Chiuminatta’s preclusion of a finding of infringement under the doctrine of equivalents for pre-existing technology only applies to means-plus-function claim limitations:
Where the patentee does not use the means-plus-function format, the resolution of infringement under the doctrine of equivalents would not allow the patentee ‘two bites at the apple,’ since the resolution of the literal infringement question would not address the issue of equivalence in a claim drawn to structure rather than to a means-plus-function. Thus, for a claim limitation not drafted in means-plus-function language, the mere fact that the asserted equivalent structure was pre-existing technology does not foreclose a finding of infringement under the doctrine of equivalents.
Patent/Interference
Actual Reduction to Practice of a Count in an Interference Requires that Every Element of the Count be Literally Present
In an appeal from a decision of the U.S. Patent and Trademark Office Board of Patent Appeals and Interferences (the "Board"), the Federal Circuit held that the Board erred in awarding priority based on a finding that the actual reduction to practice occurred where an embodiment was constructed that would work for the intended purpose of a count, even though every element of the count was not literally present. Eaton v. Evans, No. 99-1267 (Fed. Cir. Feb. 2, 2000).
The count in the interference was directed to a memory cell able to store data after its power is removed without requiring the data to be periodically refreshed. One element of the count was a device known as a sense amplifier. The Board found a first reduction to practice by a party who used an oscilloscope in place of a sense amplifier as part of its prototype. Based on the authority of Scott v. Finney, 34 F.3d 1058 (Fed. Cir. 1994), the Board found that the prototype was a reduction to practice because test results indicated that the memory cell would work for its intended purpose.
The Federal Circuit reversed, cautioning that in an interference proceeding a party seeking to establish an actual reduction to practice must satisfy a two-part test: (1) every element of the interference count must be met, and (2) the constructed embodiment or process must operate for its intended purpose. "Thus, for purposes of an interference, there can be no actual reduction to practice if the constructed embodiment or performed process lacks an element recited in the count or uses an equivalent of that element."
The panel, speaking through Judge Gajarsa, instructed that the Board’s reading of Scott was erroneous because, in effect, it "reasoned that satisfying the requirement that a constructed embodiment work for its intended purpose eliminates, or acts as a surrogate for, the requirement that the embodiment contain every element of the count." According to the Court, Scott only speaks to the second part of the test, the degree of testing necessary for a reduction to practice, which varies with the nature of the invention. Therefore, even assuming the oscilloscope used in the prototype was an equivalent of a sense amplifier, there was no actual reduction to practice because the sense amplifier claim element was not literally present.
Court Finds that Internet Service Providers Are Not Liable for the Content of Messages Which Pass Through Them
In case of first impression, the Court of Appeals of New York, speaking to the issue of the potential liability of internet service providers ("ISPs"), likened the ISPs to telephone companies and found that even if a posted message is defamatory, the ISP cannot be held liable to the person defamed. Lunney v. Prodigy Services Co., N.Y. Ct. of App. (Dec 2, 1999).
On the record presented to it, the Court of Appeals of New York likened ISPs to telephone companies which "one neither wants nor expects to superintend the content of its subscribers conversations" and which do not prepare or control messages which pass through their lines, and found that ISPs are not liable for defamation based on messages that are posted or which pass through the ISP. The Court also noted that absent a showing of malice or the like, the ISP would, in any event, be entitled to invoke common law privilege as a defense. In the Lunney case, the record established that an unidentified imposter used the name of the plaintiff, a New York teenage boy scout, to open a number of accounts with Prodigy, to post vulgar messages on a Prodigy bulletin board, and to send threatening and profane e-mail messages over the defendant ISP to a third person. The father of the plaintiff then sued the defendant ISP based on a defamation claim, which the Court dismissed. The Court noted that its holding applied not only to e-mail messages, over which an ISP has virtually no control, but also to so called "bulletin board messages over which an ISP retains a greater level of cognizance." The Court noted that even the level of control over a bulletin board is not great enough to make the ISP guarantor of the millions of messages that pass through it.
Federal Circuit Upholds Award of Attorneys Fees to Non-Party, Corporate Parent
By Laura Eversole
In a case held to be exceptional under 35 U.S.C. §285, the Federal Circuit recently upheld an award of attorneys’ fees to a non-party, corporate parent of a named defendant where the non-party had assumed some of the legal expenses. See Automated Business Companies, Inc. v. NEC America, Inc., No. 99-1316 (January 28, 2000). After finding for the defendant NEC America and finding that the case was "exceptional" under 35 U.S.C. §285, the district court awarded attorneys’ fees based in part on fees that had been paid by the defendant’s corporate parent, NEC Corporation ("NEC Corp."). Legal bills to support the amount of fees awarded reflected that some of the invoices submitted by counsel were submitted directly to NEC Corp. The facts established that the defendant, its direct parent, and NEC Corp. had all participated in settlement negotiations with the plaintiff, Automated Business Companies ("ABC"), and that NEC Corp. manufactured one of the alleged infringing devices. ABC challenged the trial court’s decision to award attorneys’ fees only to the extent that NEC Corp. was awarded fees.
The Federal Circuit upheld the award of fees, noting that for the award of attorney fees under §285, the degree of participation or control by NEC Corp. was not a critical factor. Rather, the Federal Circuit found that because the defendant’s closely-related parent companies assisted in the defense of an infringement action properly deemed exceptional and assumed some of the legal expenses, the non-party corporate parent company was entitled to an award of attorney fees for the total amount it would have paid had it defended against the action on its own. Further, the Federal Circuit held that the terms under which the named defendant and its corporate parents arranged for payment of at least some of the legal bills was not relevant.
Copyright/Internet
DMCA Effective in Obstructing DVD Software Pirates
In 1998, Congress passed the Digital Millennium Copyright Act ("DMCA") partially in response to copyright owner’s concerns about protecting intellectual property over the Internet. The District Court in the Southern District of New York recently put the DMCA to the test in Universal City Studios Inc., et al. v. Reimerdes, 2000 U.S. Dist. LEXIS 906 (S.D.N.Y. February 2, 2000) ("Reimerdes").
In Reimerdes, the defendants placed a software program on several web sites that enabled users to make unauthorized copies of DVD motion pictures by breaking through the copy protection system. The plaintiffs filed suit under the DMCA alleging that the defendants’ posting of the software on the web sites violated Section 1201(a)(2) of the DMCA, which prohibits, in part, the unauthorized offering of products designed to circumvent technological protection schemes for copyrighted works. The defendants raised four DMCA exceptions, averred that the posting of software was a copyright fair use, and that any proscription thereof was a First Amendment violation.
The court granted a preliminary injunction requiring the removal of the DVD pirating software from the web sites, and declared the DMCA constitutional under the First Amendment.
The four DMCA exceptions claimed by defendants were rejected by the court. First, the service provider exception was found to be inapplicable because the defendants were not "service providers" as defined by the statute. Also, the court found that the service provider exception only applies to copyright infringement, not violations of the anti-circumvention provisions of the DMCA. Second, the reverse engineering exception was determined inapt because the software offered on defendants’ web sites was not developed exclusively for achieving interoperability between the DVDs and one other operating system. The court found that this exception only permits reverse engineering of copyrighted computer programs, not technological copyright protection schemes. Third, the encryption research exception was found to be inapplicable because no evidence of good faith encryption research existed as the software’s apparent purpose was solely to facilitate infringement, evidenced by the lack of pre-circumvention attempts to gain copyright owner's authorization. Finally, the court disregarded the security testing exception finding that exception to be limited to testing computer systems for security flaws with the authorization of the owner, both of which were absent in this case.
Likewise, the court rejected defendants’ assertion of the fair use defense, finding that defense applies only to allegations of copyright infringement, not violations under the DMCA.
Copying of Basic Input-Output System ("BIOS") for Reverse Engineering Is Fair Use
By David A. Spenard
Intermediate copying of video game system BIOS as part of a reverse engineering process to create a compatible system is a fair use. Sony Computer Entertainment Inc. v. Connectix Corp. Case No. 99-15852 (9th Cir., 02.10.00).
Sony owned the copyright in the BIOS for its PlayStation video game system. Connectix was in the process of developing a compatible system, its Virtual Game System (VGS), that would allow PlayStation games to be played on a conventional personal computer instead of on a television connected to a PlayStation console. Connectix purchased and dissembled a Sony PlayStation and then copied the entirety of the PlayStation BIOS for examination. Based on its review of the PlayStation BIOS, Connectix developed its own BIOS code and included it in the final Connectix product. The final VGS product contained no computer code from the PlayStation BIOS.
Sony sued Connectix for copyright infringement and moved for a preliminary injunction. The district court granted the preliminary injunction, ruling that even if the final Connectix product contained none of the Sony BIOS code, the intermediate copying by Connectix was not a fair use and likely infringed Sony’s copyrights, distinguishing Sega Enterprises Ltd. v. Accolade, Inc.
The 9th Circuit reversed, finding that three of the four relevant fair use factors favored Connectix. Specifically, the appellate court found that a) the VGS was "modestly transformative" of the Sony product since it added something new, i.e., the ability to play the games on a PC rather than a TV; b) the intermediate copying by Connectix was necessary to gain access to the unprotected elements of the Sony software, citing Campbell v. Acuff-Rose Music, Inc.; and, c) the effect of the VGS on the video game market favored Connectix in that a transformative product such as the VGS was less likely to supplant or supercede Sony’s PlayStation, i.e., as compared to a game console.
The Court of Appeals also found that while Connectix copied the entire PlayStation BIOS in order to reverse engineer it, this factor was entitled to little weight because the final Connectix product did not contain the copied material and that such intermediate copying during reverse engineering was fair use as a matter of law.