Posts Tagged: "Judge Evan Wallach"

On February 10, 2016, a divided Federal Circuit panel reaffirmed the Patent Trial and Appeal Board’s (PTAB) authority to institute trial and provide a final written decision on only a subset of the challenged claims in an AIA post-grant proceeding. At issue on appeal was the PTAB’s final decision not to address all claims that were challenged in the underlying inter partes review (IPR) Petition.

The Federal Circuit took the case en banc to review the applicability of the patent exhaustion doctrine under Mallinckrodt and Jazz Photo, in view of the Supreme Court’s decisions in Quanta and Kirtsaeng. The Federal Circuit affirmed the holdings in Mallinckrodt and Jazz Photo, and distinguished them from the Supreme Court’s decisions. In Quanta, the Supreme Court was reviewing whether a patentee’s rights in a product were exhausted by a licensee’s sale of a product.

In a painfully long decision that at one point analyzed a 1628 statement of Lord Coke as relating to British common-law principles and what light that might shed on modern day patent exhaustion, the Federal Circuit held that when a patentee sells a patented article under otherwise-proper restrictions on resale and reuse communicated to the buyer at the time of sale, the patentee does not confer authority on the buyer to engage in the prohibited resale or reuse. The patentee does not exhaust its rights to charge the buyer who engages in those acts—or downstream buyers having knowledge of the restrictions—with patent infringement. The Federal Circuit also held that a foreign sale of a U.S. patented article, when made by or with the approval of the U.S. patentee, does not exhaust the patentee’s U.S. patent rights in the article sold, even when no reservation of rights accompanies the sale. Loss of U.S. patent rights based on a foreign sale remains a matter of express or implied license.

The Federal Circuit held that the district court failed to provide a proper justification for enhancing the amount by a multiplier of two. The basis for this multiplier was the court’s expeditious resolution on the merits which resulted in an “extremely low” lodestar, and had the court adopted Lumen View’s proposed schedule, FTB would have incurred more attorney fees. The Court disagreed with this as a rationale for enhancing the lodestar amount. The Court held an award can be enhanced only when it fails to account for a relevant consideration. Here, factors such as the expedited schedule were unrelated to the compensation of FTB’s attorneys and therefore, irrelevant to the enhancement of the lodestar.

Wi-LAN argued that even if they could not prove direct infringement, a structure that performs the steps in the reverse order should properly be found to infringe under the doctrine of equivalents. Curiously, the Federal Circuit disagreed despite finding the Wi-LAN argument to have merit. Exactly how the Federal Circuit came to the determination that there was substantial evidence to support the jury verdict on the doctrine of equivalents is unclear.

The PTAB refused entry of the supplemental information because Redline did nothing to justify submitting it after filing the initial IPR petition and even after the institution decision was made, other than to say that submitting it then was cost effective. The PTAB pointed out that the authorization to submit supplemental information under 42.123 does not require the PTAB to accept such information even if it is timely, noting that the moving party bears the burden in all cases to demonstrate entitlement to the relief, a rule that patent owners seeking to amend are all too familiar with (i.e., despite there being a right to file an amendment the PTAB says there is no associated right to amend).

On appeal, Ariosa challenged the Board’s refusal to consider the background reference because it was not identified as a piece of prior art “defining a combination for obviousness.” The Federal Circuit agreed with Ariosa’s position that the background reference should have been considered by the Board, stating that background art must be considered even though such art is not true “prior art” presented as the basis of obviousness grounds for review. While the Court did agree that Ariosa’s articulation of the background reference’s impact on motivation to combine prior art references was lacking, the Court found the Board’s explanation for its failure to consider the reference equally lacking and thus warranting remand.

In a November 10 ruling, the Federal Circuit held that routine quality control testing of each batch of a generic drug as part of the commercial production process, after FDA approval, is not protected by the Hatch-Waxman safe harbor provision of 35 U.S.C. § 271(e)(1). However, infringement only occurs under 35 U.S.C. § 271(g), as a result of “making” a product, which does not include quality control testing.

The sole modification in the figure amended was to change one of the 13 amino acids in the structure of daptomycin from an L-stereoisomer to a D-stereoisomer of asparagine. At the time of the invention, it was universally believed that daptomycin included the L-stereoisomer. Not until years later did Eli Lilly discover the error. In any case, the certificate of correction did not affect the validity of the patent, because daptomycin had been described in numerous ways in the application, including by referencing another application that described how to make daptomycin, which would have inherently included the D-stereoisomer.

The issue on appeal was whether a mixture comprising at least 92% of the (6S) isomer of leucovorin would have been obvious when both the 50/50 mixture of isomers and the pure (6S) isomer were known in the art. Affirming the district court, the Federal Circuit agreed that “one of skill would have been motivated to modify the prior art 50/50 mixture to make the claimed mixture,” especially when it was known that the desired activity lies with the (6S) isomer. The Court found no evidence indicating that the claimed mixture “possess[ed] unexpected advantages over the prior art pure material” so as to overcome obviousness.

Despite the Supreme Court ruling that laches is no defense to a copyright infringement action brought during the statute of limitations, the Federal Circuit ruled laches can bar recovery of legal remedies in patent infringement. The Federal Circuit explained that the 1952 Patent Act codified the common law rule, meaning that laches was codified as a defense under 35 U.S.C. 282.
The Federal Circuit, sitting en banc, followed the common law principle that, ”[w]hen a statute covers an issue previously governed by the common law, [the Court] must presume that Congress intended to retain the substance of the common law.” The Federal Circuit also ruled that laches does not preclude an ongoing royalty.

The en banc Court reversed the previous panel, and expanded the circumstances under which an alleged infringer may be liable under §271(a). In addition to circumstances identified by the panel, liability may arise if “an alleged infringer conditions participation in an activity or the receipt of a benefit upon performance of a step or steps of the patented method, and establishes the manner or timing of that performance.” When that standard is satisfied, the actions of a third party may be attributed to the alleged infringer, who thereby directly infringes under §271(a), even though there was no “mastermind” acting though a formal agent.