Rajan Law Office Blog - Rajan Law Office, LLC | Intellectual Property & Litigation

USPTO not entitled to attorney fees under 35 usc 145

7/27/2018

On July 27, 2018, in a 7-4 decision the en banc court of the Federal Circuit held that the American Rule prohibits courts from shifting attorneys' fees from one party to another absent Congress' specific and explicit directive and that the USPTO is not entitled to such fees under 35 USC 145. Nantkwest, Inc. v. Iancu, No. 16-1764 (Fed. Cir. July 27, 2018) (en banc).
In this case, the Examiner rejected an application directed to a method of treating cancer based on obviousness and the Board affirmed the decision. The applicant sought review in the district court (E.D. Va.) under 35 USC 145 and the court issued a summary judgment in favor of the USPTO. USPTO then sought reimbursement of expenses for the district court proceeding under Section 145 including attorneys fees of over $78,000. The district court denied the fees citing the American rule which requires each litigant to pay for his/her attorney's fees. On appeal, a Federal Circuit panel reversed the decision and the en banc court ordered review sua sponte.
The en banc court affirmed the district court's decision in a 7-4 decision. Writing for the majority, Judge Stoll reasoned that the word "expenses" does not include an implicit authorization to award attorneys fees under Section 145. According to the Court, the existence of several Patent Act provisions awarding attorneys fees demonstrates Congress' use of "specific and explicit" language in the Patent Act to shift fees when it so desired. Judge Prost, in her dissent joined by Judges Dyk, Reyna and Hughes, argued that the text of Section 145 imposing "all expenses" on the applicant displaces the American Rule.
Full text of the opinion is available here.

sovereign immunity challenges to IPR rejected

7/20/2018

Federal Circuit affirmed the PTAB's denial of a motion by Saint Regis Mohawk tribe to dismiss, on the basis of sovereign immunity, an IPR proceeding against patents that were assigned to the Tribe by Allergan. St. Regis Mohawk Tribe v. Mylan Pharm. Inc., Nos. 18-1638, -1639 (July 20, 2018). Allergan, owner of patents relating to Restasis product for alleviating symptoms of chronic dry eye, sued several generics including Mylan in E.D. Texas. Mylan filed an IPR challenging the patents and the PTAB instituted the IPRs. Prior to a scheduled oral hearing Allergan entered into an agreement transferring the patents to the Tribe. The Tribe then moved to terminate the IPRs asserting tribal sovereign immunity and the Board denied the motion.
On appeal, the Federal Circuit held that sovereign immunity cannot be asserted in IPRs. In affirming the Board's denials, the Court reasoned that IPR is neither a judicial proceeding instituted by a private party or an enforcement action brought by the federal government. According to the court, the "immunity does not apply where the federal government acting through an agency engages in an investigative action or pursues an adjudicatory agency action."
Full text of the opinion is available here.

Patent owner eligible to recover lost foreign profits, rules US supreme court

6/22/2018

On June 22, 2018, in a 7-2 decision, the U.S. Supreme Court held that a patent owner may recover lost foreign profits under 35 USC 284 for infringement under Section 271(f)(2). WesternGeco LLC v. Ion Geophysical Corp., 585 U.S. __ (2018). WesternGeco LLC, owner of four patents relating to lateral-steering technology for surveying the ocean floor, performs surveys for oil and gas companies using its patented technology. ION Geophysical manufactured components in the US and shipped to companies abroad who combined them to create a competing system indistinguishable from WesternGeco. WesternGeco sued for patent infringement under Section 271(f)(1) and (f)(2). At trial, WesternGeco proved that it lost 10 contracts due to ION's infringement and the jury awarded damages of $12.5 million in royalties and $93.4 million in lost profits. The district court denied ION's post-trial motion to set aside the verdict and dismissed the arguments that 271(f) does not apply extraterritorially to lost profits. On appeal, the Federal Circuit reversed the award of lost-profits damages holding that Section 271(a) does not allow patent owners to recover for lost foreign sales. The Court granted cert, vacated the Federal Circuit's judgment and remanded it in light of its Halo Elec. v. Pulse Elec. decision. On remand, the Federal Circuit reinstated its decision regarding the extraterritoriality of Section 271(f). The Court again granted cert.
In his opinion, Justice Thomas acknowledged that there's a presumption against extraterritoriality of federal statutes but questions of extraterritoriality are determined using a two-step framework. The first step asks whether the presumption has been rebutted by a clear indication of extraterritorial application in the statutory text. The second step asks whether the case involves a domestic application of the statute, which is determined by identifying the statute's focus and asking whether the conduct relevant to that focus occurred in the U.S territory. If it did, then it's a permissible domestic application of the statute. In resolving this case under step two using the court's discretion, the Court reasoned that step one would require resolving difficult questions that do not change the outcome of the case but could have far-reaching effects in future cases.
Justice Thomas, citing the Court's decision in RJR Nabisco v. European Community, which found that conduct relevant to a statute's focus which occurs in the U.S. involves a permissible domestic application of the statute, even if other conduct occurred abroad. The Court found that the focus of Section 284, in a case involving infringement under Section 271(f), is on the act of exporting components from the U.S. and therefore, the focus is domestic conduct. Because ION's domestic act of supplying the components that infringed WesternGeco's patents, lost-profits damages that were awarded were a domestic application of Section 284.
In his dissenting opinion, joined by Justice Breyer, Justice Gorsuch agreed with the Federal Circuit's result in concluding that the Patent Act forecloses claim for lost profits because in their view the Act's terms prohibit the lost profits sought in the case whatever the general presumption against extraterritoriality applicable to all statutes might allow.

inventor testimony insufficient to prove conception date

4/17/2018

On April 17, 2018, the Federal Circuit affirmed the PTAB's finding that patent owner failed to sufficiently corroborate inventor's testimony of conception. Apator Miitors APS v. Kamstrup A/S, No. 2017-1681 (Fed. Cir. Apr. 17, 2018) (Moore, J.). Kamstrup filed an IPR and Board instituted based in part on Nielsen. During trial, Apator attempted to swear behind Nielsen's effective filing date by proffering a declaration from the inventor. PTAB found that the only evidence of an earlier conception date was the inventor's declaration and that "mere unsupported evidence of the alleged inventor, on an issue of priority" was insufficient proof of prior conception. Based on its finding, the PTAB found the claims to be unpatentable in view of Nielsen reference. On appeal, the Federal Circuit, a panel consisting of Judges Moore, Linn and Chen, affirmed finding that substantial evidence supported the PTAB's finding. The Court reasoned that Apator failed to meet its burden of proof because the email evidence provided to support an earlier conception date failed to indicate that a file relating to the invention was attached.
Full text of opinion is available here.

Section 271(e) infringement applies for anda amendments

4/13/2018

On April 13, 2018, the Federal Circuit held that 35 USC 271(e) infringement applies for ANDA amendments including paragraph IV certification for later-issued patent. Vanda Pharma. Inc. v. West-Ward Pharma. Int'l Ltd., No. 16-2707 (Fed. Cir. Apr. 13, 2018). Vanda owns '610 patent for schizophrenia treatment using iloperidone and has an exclusive license to expired '198 patent which covers the iloperidone compound. Vanda owns a NDA for antipsychotic drug Fanapt (iloperidone) and West-Ward filed an ANDA before '610 issued or was listed in the Orange Book. Vanda sued West-Ward for infringement of '198 patent. After '610 patent issued, Vanda sued for infringement of '610 patent and then Vanda listed '610 patent in the Orange Book. West-Ward amended its ANDA to contain para IV certification that '610 patent is invalid and/or not infringed and sent Vanda the para IV notice re '610 patent. The district consolidated the two lawsuits and found that West-Ward's submission of para IV certification for '610 patent was an act of infringement.
On appeal, the Federal Circuit, in a split decision, held that amending the ANDA by submitting a para IV certification is an act of infringement under the Hatch-Waxman act even if the patent issued after the ANDA filing but before FDA approval. The majority reasoned that the legislative history supports the conclusion that "application," as referred to in Section 271(e)(2)(A), includes ANDA amendments.
Full text of the opinion is available here.

ptab's time-bar determinations appealable, rules fed. cir. en banc

1/9/2018

On Jan. 8, 2018, the en banc court of the Federal Circuit held that the time-bar determinations under 35 USC 315(b) are appealable and overruled the court's 2015 ruling in Achates. Wi-Fi One, LLC v. Broadcom Corp., Nos. 2015-1944, -1945, -1946 (Fed. Cir. Jan. 8, 2018) (en banc) According to the Court, there was no clear and convincing indication of congressional intent barring judicial review of USPTO's action denying institution of inter partes review that are filed more than one year after the petitioner is served with a complaint for patent infringement.

Full text of the opinion is available here.

invalidity judgment reversed due to lack of intrinsic/extrinsic evidence to support indefiniteness

11/20/2017

On Nov. 20, 2017, the Federal Circuit reversed the lower court's judgment of invalidity for indefiniteness on the grounds that the intrinsic or extrinsic evidence failed to support indefiniteness. BASF Corp. v. Johnson Matthey Inc., No. 2016-1770 (Fed. Cir. Nov. 20, 2017). BASF, owner of patent directed to systems for performing catalytic conversion of nitrogen oxides in exhaust gas streams, sued Johnson Matthey for infringement. The district court held that the asserted patent was invalid because the "effective to catalyze" language is indefinite and accordingly, entered a judgment of invalidity of all claims.
On appeal, BASF argued that the "composition...effective to catalyze" has a plain and ordinary meaning and it is not indefinite because a person of ordinary skill in the art would understand it to be "composition capable of catalyzing" based on the specification. Johnson Matthey argued that the "effective to catalyze" is indefinite because the language is functional and there are limitless number of materials that can catalyze ammonia oxidation or SCR reactions.
In reversing the district court's judgment, the Federal Circuit reasoned that the Nautilus standard of "reasonable certainty" does not preclude defining a claim term by its function, that the specification provides exemplary material compositions that are effective to catalyze, and that objective tests to determine the effectiveness of the catalysts were available and well known at the time. Based on the intrinsic and extrinsic evidence, the Federal Circuit held that the claims of the asserted patent were not indefinite.

TC Heartland is intervening change of law

11/15/2017

On November 15, 2017, the Federal Circuit ruled that the U.S. Supreme Court's decision in TC Heartland was an intervening change in the law that excuses waiver of venue objection. In re Micron Tech., Inc., No. 2017-138 (Fed. Cir. Nov. 15, 2017). Harvard College filed a patent infringement suit against Micron and Micron filed a 12(b)(6) motion to dismiss for failure to state a claim but failed to object to venue under 12(b)(3). Subsequent to the TC Heartland decision, Micron filed a 12(b)(3) motion for improper venue. The federal district court of Massachusetts denied the motion concluding that under FRCP 12(g)(2) and (h)(1)(A), Micron had waived its venue defense and TC Heartland was not a change of law that would make the waiver rules inapplicable. Micron filed a writ of mandamus to the Federal Circuit requesting reversal of the district court's order, dismissal of the suit for improper venue or transfer to the Delaware or Idaho.
In granting Micron's petition, the Federal Circuit concluded that TC Heartland was an intervening change of law and therefore, the waiver rules were inapplicable. The Court reasoned that for FRCP 12(g)(2) to apply, and for the unmade venue defense to be waived under FRCP 12(h)(1)(A), the venue defense had to be "available" to the defendant at the time the 12(b) motion is filed, and such venue objection was unavailable until TC Heartland. Full text of the order is available here.

equitable estoppel to compel arbitration is limited

9/13/2017

On September 13, 2017, the Federal Circuit affirmed the decision of the federal district for the Northern District of California holding that equitable estoppel to compel arbitration is limited to narrow situations. Waymo LLC v. Uber Tech., Inc., et al., No. 2017-2130 (Fed. Cir. Sept. 13, 2017). Waymo alleged, among others, that defendants Uber, Ottomotto, and Otto Trucking violated trade secret laws by employing Levandowski. Defendants filed a motion to compel arbitration based on the grounds that Levandowski's employment agreements with Waymo contained arbitration clauses and that Waymo relied on these agreements to prove its claims against the defendants. Waymo denied any such reliance. In denying the motion to compel arbitration, the district court found that equitable estoppel does not apply here as Waymo didn't rely on the agreements. In affirming the district court's decision, the Federal Circuit reasoned that California precedence requires that equitable estoppel to compel arbitration be applied only when the issues of the complaint are intimately intertwined with the non-party agreement containing the arbitration clause.
Full text of the opinion is available here.

Compelling evidence of nonobviousness insufficient

9/7/2017

On September 7, 2017, the Federal Circuit, in a split decision, affirmed the district court's summary judgment of obviousness despite substantial and compelling evidence of objective indicia of non-obviousness. Intercontinental Great Brands LLC v. Kellogg N.Am. Co., No. 2015-2082, -2084 (Fed. Cir. Sept. 7, 2017). The Federal Circuit agreed with the district court's finding that significant copying, increased sales volume, customer and industry praise, and long-felt need were not enough to overcome the prima facie obviousness.
Kraft sued Kellogg claiming that Kellogg infringed its patent directed to a re-sealable food package that keeps cookies fresh. The district court determined that a person of ordinary skill in the art would have been motivated to combine the known elements of "frame" and "rigid re-sealable sushi tray" because the lack of a "convenient opening and reclosing arrangement" was a known problem for cookie packaging. The district court also acknowledged the substantial and compelling evidence of objective indicia of non-obviousness--Kraft's sales volume increase of 4% after new packaging, evidence of positive consumer feedback, survey results praising the invention, industry awards for innovative packaging technology, and Kellogg's intentional copying of its packaging. However, the district court granted summary judgment motion finding that the prima facie case of obviousness was too strong.
On appeal, the dispute was the procedure used to determine obviousness under KSR namely, that the district court considered only the first three factors when assessing the prima facie case and then moved on to the fourth factor to decide if secondary considerations would overcome the prima facie obviousness. The majority of the panel agreed with the district court's analysis stating that its analysis fulfills KSR's requirement that the approach to determining obviousness be expansive and flexible. Dissenting in part, Judge Reyna expressed his concern that if "such significant evidence does not make a difference in this case, it is hard to imagine a situation in which it would."
Full text of opinion is available here.