Welcome to Winston & Strawn’s Federal Circuit Patent Decision Summaries. This bulletin provides a short summary of, and links to, the precedential patent cases decided by the Federal Circuit last week. We hope that these summaries are useful in keeping you updated on the Federal Circuit’s patent decisions.

Joinder requires “shared, overlapping facts” and not merely products that are “not dramatically different.” 

In re EMC Corp., Misc. No. 2011-M100 (Fed. Cir. May 4, 2012)

In this pre-America Invents Act case, eight of the 18 alleged infringers named in a single complaint for patent infringement moved for severance and transfer.  In denying the motion, the district court found that Rule 20’s same transaction or occurrence requirement was met because the accused products were “not dramatically different.”  On petition for writ of mandamus, the Federal Circuit granted the writ and remanded for further proceedings. 

The Federal Circuit held that “[c]laims against independent defendants (i.e., situations in which the defendants are not acting in concert) cannot be joined under Rule 20’s transaction-or-occurrence test unless the facts underlying the claim of infringement asserted against each defendant share an aggregate of operative facts.”  Applying this standard, the same transaction or occurrence test is not satisfied by accused products that are “not dramatically different.”  Indeed, “[t]he sameness of the accused products is not enough to establish that claims of infringement arise from the ‘same transaction.’”  Because the district court incorrectly employed the “not dramatically different standard,” the court granted the writ of mandamus.

In light of the writ being granted, the Federal Circuit further instructed that in addition to considering the presence or absence of common operative facts, district courts should consider other factors in determining whether joinder is appropriate.  Specifically, district courts should consider the time period of the alleged infringing acts, the relationships between the alleged infringers, the sources of the components, and the types of damages.

The court noted that the joinder rules for patent cases were amended in the AIA, and thus, the standard articulated in this case only applies to cases filed before the signing of that law.

A copy of the opinion can be found here. 

In a suit for malpractice against patent prosecution counsel, alleging that counsel's negligence cost the chance for valuable claim scope, an inference of non-obviousness does not attach to alternative claim language simply on the basis of favorable treatment of the claims of the issued patent by the Examiner when the alternative claims use different terms.

Herman Minkin and H&M Aeronaut Tool Co. Inc. v. Gibbons P.C., No. 2011-1178 (Fed. Cir. May 4, 2012).

The patentee alleged its prosecuting attorneys engaged in legal malpractice by negligently drafting the claims too narrowly to provide any protection against infringers.  The parties agreed that under the “suit-within-a-suit” analysis for malpractice claims, the patentee had to prove that the alternative claim language would have been patentable.  The district court granted summary judgment on behalf of the prosecuting attorneys' finding that the patentee had not proven the patentability of the alternative claims.  The Federal Circuit affirmed.

Under the “suit-within-a-suit” analysis for malpractice claims, the patentee “must prove by preponderant evidence that alternate claim language would have been deemed patentable by the PTO and that it would have read on the [allegedly infringing product].”  The patentee argued that to avoid summary judgment, it need only distinguish the prior art not prove that the alternative claims were non-obvious.  Although during prosecution, the patentee typically only responds to specific cited prior art references, the court stated that malpractice cases required “a demonstration of the likelihood of patentability.”  Hence, the patentee had to raise a factual dispute that the alternative claims were non-obvious.  In this case, the patentee’s failure to raise a disputed issue of fact concerning obviousness warranted granting summary judgment to the prosecuting attorneys.

The court also rejected the patentee’s argument that the alternative claim language was patentable because the PTO granted the patentee a narrower patent.  “An inference of non-obviousness does not attach to the alternate claims by virtue of the [favorable treatment by the Examiner of the] issued patent because the claim terms are different.” 

A copy of the opinion can be found here. 

A claim using the word “means” is presumed to be a means-plus-function claim unless the claim includes a specific and definite structure, and repeated derogatory statements in the specification are construed as a disavowal of claim scope.

Chicago Board Options Exchange, Inc. v International Securities Exchange, LLC, No. 2011-1267 (Fed Cir. May 7, 2012).

The patentee sued for infringement of a patent to an invention relating generally to markets for the exchange of securities.  Based on its construction of a means-plus-function term, “system memory means”, as well as two other terms, “matching” and “automated exchange,” the district court granted summary judgment of noninfringement for the alleged infringer.  The patentee appealed the district court’s construction of these limitations.  The Federal Circuit affirmed-in-part, reversed-in-part, and remanded. 

The Federal Circuit held that “system memory means” was a means-plus-function term.  The claim language did not overcome the presumption raised by the word “means” because the claim language did not recite a specific and definite structure.  The district court, however, incorrectly determined that the corresponding structure of “system memory means” contained three separate components.  After looking to the specification “as a whole” and applying the general presumption that different terms have different meanings, the court concluded that the structure associated with the function was “system memory” without any additional elements.

The court also affirmed the district court’s construction of “exchange” and “automated exchange” as not including traditional open outcry or floor-based trading systems.  “[W]here the specification makes clear that the invention does not include a particular feature, that feature is deemed to be outside the reach of the claims of the patent, even though the language of the claims, read without reference to the specification, might be considered broad enough to encompass the feature in question.”  Applying this principle, the court noted that “the specification goes well beyond expressing the patentee’s preference for a fully automated exchange over a manual or a partially automated one, and its repeated derogatory statements about the latter reasonably may be viewed as a disavowal of that subject matter from the scope of the patent’s claims.” 

A copy of the opinion can be found here. 

A patent for a product, while presumed valid, is rendered invalid if a challenging party proves by clear and convincing evidence that the product in public use or on sale prior to the critical date, one year prior to the patent filing, [was] embodied [by] the claimed invention.

Leader Technologies, Inc. v. Facebook, Inc., No. 2011-1366 (Fed. Cir. May 8, 2012).

The patentee sued alleging infringement of various claims of its patent for software that allows users on a network to communicate and collaborate on a large scale.  A jury returned a verdict in favor of the alleged infringer, finding that the asserted claims of the ‘761 patent were invalid on two independent grounds:  1) that the invention was subject to an invalidating sale; and 2) that the invention was subject to an invalidating public use.  The district court denied the patentee’s post-trial motion for judgment as a matter of law or for a new trial.

On appeal, the Federal Circuit affirmed the district court’s denial of the patentee’s motion.  The central issue was whether the software that was publicly used and on sale prior to the critical date under 35 U.S.C. § 102(b), one year prior to the patent filing date, fell within the scope of the asserted claims of the patent, rendering them invalid.   Applying the law of the Third Circuit, the Federal Circuit upheld the district court’s denial of judgment as a matter of law, as the record contained substantial evidence that the software on sale and in public use prior to the critical period fell within the scope of the asserted claims, and denial of a new trial, as the district court did not abuse its discretion in concluding that the verdict was not against the great weight of the evidence.  Both district court findings were appropriate where the patentee failed to cite any contemporaneous evidence indicating that the software that existed prior to the critical date was substantively different from the post-critical date software and where, in fact, the evidence in the record pointed to the contrary. 

A copy of the opinion can be found here. 

Under 35 U.S.C. § 251, the third prong of the recapture rule analysis requires that courts evaluate whether a modification materially narrows the reissue claim compared to the application’s original claim such that surrendered subject matter is not substantially recaptured. “Overlooked aspects” are irrelevant.

In re Roger Youman and Marney Morris, No. 2011-1136 (May 8, 2012)

Applicants claimed an electronic program schedule system for televisions and, after an initial rejection, successfully patented their amended claims. Within two years, applicants filed a reissue application with additional claims. The examiner rejected the new claims under 35 U.S.C. § 251 because they improperly recaptured subject matter surrendered in the first application. The Board of Patent Appeals and Interferences agreed, applicants appealed, and the Federal Circuit reversed and remanded.

The recapture rule bars a patentee from recapturing subject matter he intentionally surrendered during prosecution to overcome prior art. The Board applied a three-step test and found: (1) the applicants’ reissue claim was broader than the patented claim; (2) this broadening related to the surrendered subject matter; and (3) the reissue claim could not avoid the recapture rule because the applicants’ potentially narrowing limitations “were not overlooked during prosecution.”

The Federal Circuit reversed the Board’s application of the third prong. First, the Board incorrectly stated that any broadening of the patented claim, no matter how minimal, was enough to invoke the recapture rule bar. Instead, courts must evaluate the modification “to determine if it materially narrows relative to the original claim such that surrendered subject matter is not entirely or substantially recaptured.” Second, the Board incorrectly evaluated whether other limitations added during reissue covered an “overlooked aspect” of the invention. “Overlooked aspects” is a separate inquiry under reissue, independent of whether the recapture rule applies.

Judge Lourie dissented, finding the scope of a reissue claim should be compared with the patented claim, not the original application claim, in recapture analysis.

A copy of the opinion can be found here. 

Prior art describing an unexecuted process or protocol may inherently anticipate claims when the result at issue inevitably flows from its disclosures.

In re Hugh Edward Montgomery, John Francis Martin, and Jorge Daniel Erusalimsky, No. 2011-1376 (Fed. Cir. May 8, 2012).

Applicants sought to patent the use of a renin-angiotensin hormone system inhibitor to improve, treat, or prevent various health conditions. The examiner rejected as anticipated by four prior art references three of applicants’ claims relating to stroke treatment and prevention. Applicants sought rehearing, arguing in part that one of the references, a study describing the design of an unexecuted, randomized clinical trial of the inhibitor, was merely a proposal for future research that was not enabled. The Board of Patent Appeals and Interferences rejected this and applicants’ other arguments and affirmed the examiner’s rejection of the claims.

A divided Federal Circuit panel affirmed the Board’s rejection of the claims after determining that they were inherently anticipated by the study describing the clinical trial protocol. Inherent anticipation occurs when a claim limitation is necessarily present in the reference or must inevitably result from its disclosed steps. Inherency may not inure from probabilities or possibilities, but prior art that does not disclose actual creation or reduction to practice may still anticipate where it contains an enabling disclosure, even if those of ordinary skill may not have recognized the inherent characteristics.

The majority concluded that the prior art inherently anticipated the claims at issue here because it disclosed a protocol for the administration of the inhibitor to stroke-prone patients, and administration of the inhibitor to stroke-prone patients inevitably treats or prevents stroke. The majority agreed with the dissent that mere invitations to investigate cannot constitute inherent disclosures, but found that the protocol described by the study, which was designed to secure regulatory approval, was not so abstract as to render inherent disclosure impossible.

The dissent would have concluded that the study here failed to inherently anticipate the claims at issue because the results the proposed protocol may have achieved were neither predictable nor inevitable. In the dissent’s view, inherency requires description of an action that inevitably produces a result, not simply description of an action that, if carried out, might have yielded that particular result.

A copy of the opinion can be found here.