In a non-precedential opinion issued October 18, 2013, the Federal Circuit issued a decision that calls into question the overall utility of forum selection clauses in contractual relationships. In fact, Eli Lilly lost its bid to have its dispute with Genentech and City of Hope heard in the Northern District of California despite having a forum selection clause in the governing contract that stated the parties would litigate any dispute in the Northern District of California. See In re Eli Lilly and Co.
The en banc Federal Circuit on September 13, 2013, heard oral argument on whether to overrule its en banc decision in Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448 (Fed. Cir. 1998), and hold that claim construction can involve issues of fact reviewable for clear error, and that it is not entirely an issue of law subject only to de novo review. Lighting Ballast Control LLC v. Universal Lighting Technologies, Inc., Fed. Cir., No. 2012-1014, 3/15/2013.
Lighting Ballast Control LLC (LBC) owns a patent (5,436,529) on control and protection circuits for electronic lighting ballasts commonly used in fluorescent lighting. The patent includes the term “voltage source means” in the following context: “voltage source means providing a constant or variable magnitude DC voltage between the DC input terminals.” LBC sued Universal Lighting Technologies, Inc. (ULT).
District Court Decision
On appeal is the district court decision that a person of ordinary skill in the art would understand the claim term “voltage source means” to correspond to a rectifier or other voltage supply device. It thus rejected ULT’s argument that the term invokes Section 112 ¶6 and that the claim is invalid for indefiniteness for lack of specific structure in the specification. A Federal Circuit panel reversed in a nonprecedential decision, concluding from a de novo review that “voltage source means” does invoke Section 112 ¶6 and that the claim is invalid for indefiniteness. That panel decision was vacated when the appellate court decided to consider the claim construction issue en banc.
The Federal Circuit’s original opinion issued January 22, 2013, and was authored by Judge Neman with Judges Prost and Reyna in agreement. In that January 2013 opinion the Court identified claim 34 as representative of the “shopping cart” claims, and held claim 34 invalid on the ground of obviousness. The parties stated, on petition for rehearing, that the Federal Circuit ruling should have been for claim 35, which would conform to the judgment entered on the jury verdict. But that is where the agreement between the parties ended. Soverain requested further proceedings on the merits, while Newegg proposed that the Federal Circuit correct what they referred to as a “typographical error.” The Federal Circuit ordered additional briefing.
Supreme Court Bound?
Before jumping into the substance of this case, the first thing I noticed was that Seth Waxman of Wilmer Cutler Pickering Hale and Dorr was listed as the lead attorney for Soverain Software in both the petition for rehearing and the ensuing briefs. Robert Wilson of Quinn Emanuel Urquhart & Sullivan, who specializes in life sciences litigation and appellate matters, was previously the lead attorney for Soverain. Wilson remains on the brief, which is common when the next step toward the Supreme Court is contemplated. But it is hard to imagine that Soverain has brought in Seth Waxman at this late stage if they are not contemplating an appeal to the Supreme Court.
After the Federal Circuit issued its en banc decision on May 10, 2013 in CLS Bank v. Alice Corp, the patent owner Alice Corp must be feeling like Alice in Alice in Wonderland, bewildered and frightened by the fantastical situation in which they find themselves:
(1) “bewildered” because an equally divided Federal Circuit affirmed the district court’s holding that Alice’s claimed system to tangible machine components including a first party device, a data storage unit, a second party device, a computer, and a communications controller, programmed with specialized functions consistent with detailed algorithms disclosed in the patent, constitutes a patent ineligible “abstract idea;”
(2) “frightened” because, as Judge Moore puts it, “this case is the death of hundreds of thousands of patents, including all business method, financial system, and software patents as well as many computer implemented and telecommunications patents” (Moore Op. at 2); and
In what can only fairly be characterized as utterly ridiculous, 5 of the 10 judges on the Federal Circuit to hear CLS Bank v. Alice Corporationen banc would find that claims that satisfy the machine-or-transformation test are not patentable. While I think it is inappropriate to find the systems claims patent ineligible that isn’t what makes the decision utterly ridiculous. The decision is an embarrassment because 5 other judges would have found the systems claims patent eligible. Thus, we have an even split of opinion at the Federal Circuit.
The Federal Circuit decision in CLS Bank v. Alice Corp. is now being horribly mischaracterized in the media, which will now only further complicate the matter in the court of public opinion. This decision offers no precedent whatsoever regarding systems claims because it was a tie. Alice Corporation loses the systems claims not because that is the law of the land announced by the Federal Circuit, but rather because a single district court judge determined that the systems claims were patent ineligible. Had that same district court judge found the systems claims patent eligible then Alice would have prevailed.
In other words, the Federal Circuit is essentially abdicating its authority relative to whether systems claims are patentable to the district courts and presumably also to the Patent Trial and Appeals Board at the United States Patent and Trademark Office. Whatever the district court or PTAB does is just fine. Well, not quite.
Well, the United States Court of Appeals for the Federal Circuit sort of decided CLS Bank v. Alice Corporation earlier today. Truthfully, all the important questions that we thought might be answered remain completely and totally unanswered because there were only 10 judges who sat on the en banc tribunal and no more than 5 judges signed on to any one opinion.
The only thing we know is this — the Federal Circuit issued an extraordinarily brief per curiam decision, which stated:
Upon consideration en banc, a majority of the court affirms the district court’s holding that the asserted method and computer-readable media claims are not directed to eligible subject matter under 35 U.S.C. § 101. An equally divided court affirms the district court’s holding that the asserted system claims are not directed to eligible subject matter under that statute.
Thus, all of the asserted claims are not patent eligible. At the moment I am completely flabbergasted and don’t know what to say.
A patent practitioner prosecuting an application would not normally worry about an issued patent having a much later filing date. The CAFC’s Hubbell decision shows, however, that such a patent can create a problem under the doctrine of obviousness-type double patenting, that prevents the earlier-filed application from issuing.
Hubbell is an inventor of U.S. Application 10/650,509. Hubbell appeals from the decision of the Board of Patent Appeals and Interferences affirming the Examiner’s final rejection of his claims for obviousness-type double patenting over U.S. Patent No. 7,601,685, which also names Hubbell as an inventor. The ‘509 application was filed on August 27, 2003, but claims benefit of a provisional application filed in 1997 when Hubbell was a professor at CalTech. Thus, the ‘509 application is assigned to CalTech.
Hubbell left CalTech and joined the faculty at Eidgenossische Technische Hochschule Zurich (“ETHZ”) in 1998. The application which issued as the ‘685 patent was filed on December 17, 2002 and is jointly assigned to ETHZ and Universitat Zurich. It is undisputed that the ‘509 application and the ‘605 patent do not have identical inventive entities, nor do they have common assignees. It is also undisputed that the ‘685 patent is not available as prior art under 35 USC §§ 102 or 103. The Patent Office concluded that the ‘685 patent claims “are a species of the instantly claimed invention and thus anticipate the claimed invention,” in making its obviousness-type double patenting rejection.
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