Tag Archives: Federal Circuit

Federal Circuit Holds That Isolated Genes Are Patent Eligible — Association for Molecular Pathology v. Myriad Genetics

Posted on August 1, 2011 by | 1 comment

by: Robert Wagner, intellectual property attorney at Picadio Sneath Miller & Norton, P.C.

The patentability of genes and genetic testing remains a controversial topic, enough so that the Supreme Court granted cert in Mayo Collaborative Services v. Prometheus Laboratories to address some of these issues. (See our prior post). On Friday, the Federal Circuit issued a lengthy and fractured 105-page decision in Association for Molecular Pathology v. Myriad Genetics, Inc. (No. 10-1406) that held that claims to an isolated DNA molecules were patentable subject matter under 35 U.S.C. § 101. Judge Lourie delivered the decision of the Court, Judge Moore concurred in part, and Judge Bryson concurred and dissented in part.

Background

The patents at issue are directed a test to screen for mutations in BRCA genes that correlate with an increased risk of breast and ovarian cancer. The inventors identified markers in DNA sequences from individuals with inherited breast and ovarian cancers. This knowledge allowed Myriad to create diagnostic testing services for women.

Myriad began sending cease-and-desist letters to doctors who performed testing that it believed infringed its patents. A number of doctors and researchers then filed a declaratory judgment action against Myriad Genetics, Inc., claiming that certain claims in seven of Myriad’s patents were invalid because they contain patent-ineligible subject matter under 35 U.S.C. § 101. The district court agreed with the plaintiffs and invalidated all fifteen challenged claims. The Federal Circuit reversed as to three of the claims (in a 2–1 decision) and unanimously affirmed the district court’s decision as to the remainder.

The Claims at Issue

Myriad’s claims fell into three broad categories: (1) three composition claims, (2) a screening method claim, and (3) eleven comparing/analyzing method claims. The Federal Circuit found that the first two types were patent-eligible under § 101, but the third type was not.

The composition claims were for two “isolated” human genes (BRCA1 and BRCA2) that are free-standing portions of a larger, native DNA molecule and synthetic complementary DNA molecule (cDNA). In essence, these isolated genes are sections of DNA that has been cleaved from a naturally-occurring DNA molecule. Myriad isolated the portions of the naturally-occurring DNA molecule that correlated with the cancer and patented it.

The screening method claim recites the steps of growing host cells transformed with an altered BCRA gene in the presence of a potential cancer therapeutic, determining the growth rate of these cells, and comparing the growth rate of the host cells. The comparing/analyzing method claims, on the other hand, simply call for comparing samples from a tumor of the isolated genes from a patient with a non-tumor sample.

The Court Finds the Composition Claims Are Patentable Subject Matter

Before making its determination, the Court traced the state of the law regarding § 101 by looking at the Supreme Court’s decisions in Diamond v. Chakrabarty, 447 U.S. 303 (1980) and Funk Borthers Seed Co. v. Kalo Inoculant Co., 333 U.S. 127 (1948). These decisions involved whether man-made, living microorganisms are patentable under § 101.

Ultimately, the Federal Circuit concluded that § 101 requires that a composition’s identity must be “markedly different” in comparison with what exists in nature for the composition to be patent-eligible:

The distinction, therefore, between a product of nature and a human-made invention for purposes of § 101 turns on a change in the claimed composition’s identity compared with what exists in nature. Specifically, the Supreme Court has drawn a line between compositions that, even if combined or altered in a manner not found in nature, have similar characteristics as in nature, and compositions that human intervention has given “markedly different,” or “distinctive,” characteristics.

Judge Lourie found that Myriad’s composition claim satisfied this test because the isolated genes, while they could be found inside a naturally-occurring DNA molecule, had distinct chemical identities and natures different from the DNA molecule once they were removed. The isolated genes are not the same molecules as exist in the body, and the creation of these isolated genes requires human intervention. He rejected the argument that the isolated genes are merely purified forms of a natural material.

Judge Moore, in her concurrence, reached the same result. She found that a fragment of a DNA sequence has different properties and different physical characteristics than the parent DNA from which it is obtained. In addition, the cDNA gene is entirely different than the naturally-occurring DNA molecule because introns are removed and it contains the opposite (complementary) sequence of RNA. The exact cDNA gene is not found in nature, so it is easily patent-eligible.

In his dissent, Judge Bryson sharply disagreed with respect to the non-cDNA composition claims. He would have held that any gene that is found in nature, even if found within a larger DNA molecule, is unpatentable. Judge Bryson analogized these genes to minerals discovered in the earth. Simply extracted a naturally-found mineral is not patentable, so simply extracting a naturally-found gene from DNA should not be patentable.

The Method Claims

The decisions with respect to the method claims were much easier for the Court, and the Judges unanimously agreed. The comparing/analyzing claims were not patent eligible because they amounted to nothing more than the mental steps of comparing two genes. There was no transformation involved, so they were not patent eligible. The screening method claim, on the other hand, had a number of transformations central to the purposes of the claimed process. Thus, it was patent eligible.

Standing to Bring the Action

A significant part of the decision also addressed whether any of the plaintiffs had standing to bring the claim under the Declaratory Judgment Act. All three Judges agreed that at least one of the doctors did have standing. For those interested in standing issues and what is sufficient under the Declaratory Judgment Act, this decision is an interesting read.

The Takeaways

The Federal Circuit seems to have a different test for genetic materials than other compositions. All three Judges agreed that extracting a naturally-found mineral or element from a rock would not be eligible for patent protection. Under the majorities’ holding, however, extracting genetic material from a naturally-occurring DNA molecule is eligible for patent protection (assuming the other requirements of the Patent Act can be met). The decision maintains a long history of allowing patents in the field of genetics.

It will be interesting to see if this case is addressed en banc or whether the Supreme Court will weigh in on these issues in its upcoming case in Mayo Collaborative Services. Given the sharp dissent in this case, and the importance of these types of patents, it is unlikely that we have seen the last of these decisions.

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Federal Circuit Hears Oral Arguments on Constitutionality of Patent False Marking Statute

Posted on July 8, 2011 by | Comments Off on Federal Circuit Hears Oral Arguments on Constitutionality of Patent False Marking Statute

by: Robert Wagner, intellectual property attorney at Picadio Sneath Miller & Norton, P.C.

Yesterday, the Federal Circuit heard oral arguments in FLFMC, LLC v. Wham-O, Inc. (No. 2011-1067) to decide whether the patent false marking statute (35 U.S.C. § 292) is constitutional under the “Appointments” and “Take Care” clauses of the United States Constitution (Article II, Sections 2 and 3). The panel is comprised of Judges Linn, Dyk, and Prost, and attorneys representing FLFMC, Wham-O, the US government, and the Chamber of Commerce of the United States of America argued before the Court. An audio recording of the argument can be heard here.

The district court below (from the Western District of Pennsylvania) dismissed FLFMC’s lawsuit, finding that it lacked standing to bring the action, and FLFMC appealed to the Federal Circuit.

It is difficult to predict how the Court will rule from the argument yesterday, but we can get an idea of some of the key issues that the Court is wrestling with. The argument chiefly focused on two key issues—(1) is there a sufficient government notice requirement in the statute and (2) does the government have sufficient control over the litigation to satisfy its constitutional obligations?

Does § 292 Require Notice to the Government?

As to the first issue, counsel for FLFMC noted that there is a provision for giving the USPTO notice of any lawsuit involving a patent (35 U.S.C. § 290) and many plaintiffs are giving the government notice as a matter of routine practice. Counsel for Wham-O countered that many plaintiffs are not giving notice under § 290 or otherwise and that § 290 only requires notice within 30 days of filing suit, by which time many cases have been settled and dismissed. In either case, the government is not getting adequate notice to fulfill its constitutional obligations. The government conceded that the notice under § 290 does not specifically indicate that the lawsuit involves allegations of false marking, so the government would have to specifically investigate every patent case filed to determine whether it involved false marking, as opposed to infringement, for example.

The Court clearly was concerned about the apparent lack of notice, and the panel questioned whether it could create a notice requirement to preserve the constitutionality.

Does the Government Have Sufficient Control of the Litigation?

The other key issue was the government’s ability to intervene and control the litigation. On its face, the statute is silent about government control and intervention. Counsel for FLFMC argued that the Federal Rules of Civil Procedure give the government the right to intervene because it has a stake in the outcome of the lawsuit, and that the Court can look to these Rules in determining the constitutionality. The Court seemed to accept this argument. Counsel for Wham-O countered that while the government may be able to intervene, it has no ability to control the litigation. It cannot force a dismissal of the lawsuit or reject a settlement. It can only ask the Court for assistance, which puts the government in no better a position that any other amicus or intervenor. There was also some dispute over whether civil litigants should be precluded from bringing suit if the government has already filed a criminal action.

What’s Next?

Given the tenor of the argument, it seems safe to say that the Court has some concerns about the constitutionality of the false marking statute. Whether those concerns rise to the level of invalidating the statute is another question. What will be interesting is how the decision in this case will affect the legislation pending in Congress that rewrites the false marking statute (HR 1249, § 16 and S 23, § 2(k)). Should the Court hold that the current false marking statute is unconstitutional, it may require Congress to revisit the amendments to that statute.

Additional Materials

  • The parties’ Federal Circuit briefs can be found here.
  • The District Court order finding no standing can be found here.

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Will Patent False Marking Litigation Flame Out?

Posted on July 1, 2011 by | Comments Off on Will Patent False Marking Litigation Flame Out?

by: Robert Wagner, intellectual property attorney at Picadio Sneath Miller & Norton, P.C.

With the House and Senate passing versions of the America Invents Act that will reform the patent laws as we know them, I thought it would be interesting to look back at how patent false marking litigation burst onto the scene in 2010 and how it appears to be flaming out now in 2011. In the last two years, the patent world has been abuzz with claims of false marking brought by individuals against some of the largest companies in America. There were fears that this litigation would result in monstrous penalties where there was little “wrongful” action. As typically happens, these fears appear to have been overblown. While certainly a headache for those companies that were sued and for those companies that have gone to great lengths to verify compliance with the statute, the result seems to be more of a short-term inconvenience.

History of False Marking Law

False patent marking has been around for a long time, first appearing in the Patent Act of 1842, which prohibited the false marking of products with the intent to deceive the public with a fine of not less than $100. Later, in 1952, Congress changed the statute to impose a penalty of not more than $500 per offense:

(a) Whoever, without the consent of the patentee, marks upon, or affixes to, or uses in advertising in connection with anything made, used, offered for sale, or sold by such person within the United States, or imported by the person into the United States, the name or any imitation of the name of the patentee, the patent number, or the words “patent,” “patentee,” or the like, with the intent of counterfeiting or imitating the mark of the patentee, or of deceiving the public and inducing them to believe that the thing was made, offered for sale, sold, or imported into the United States by or with the consent of the patentee; or Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article, the word “patent” or any word or number importing that the same is patented for the purpose of deceiving the public; or Whoever marks upon, or affixes to, or uses in advertising in connection with any article, the words “patent applied for,” “patent pending,” or any word importing that an application for patent has been made, when no application for patent has been made, or if made, is not pending, for the purpose of deceiving the public– Shall be fined not more than $500 for every such offense.

35 U.S.C. § 292(a). Prior to 2009, courts interpreting these statutes held that the penalty should not be imposed for each article falsely marked, but rather should be imposed for the decision to falsely mark a product line. See, e.g., London v. Everett H. Dunbar Corp., 179 F. 506 (1st Cir. 1910). As a result, there was little incentive for a litigant to bring a false marking claim and few cases were filed.

Pequignot v. Solo Cup and Forest Group v. Bon Tool

In 2007, things began to change. Matthew Pequignot, a patent attorney, filed suit against Solo Cup for falsely marking its plastic cup lids with expired patent numbers. Pequignot argued that the prior holdings were incorrect and that penalties should be imposed per article. Because there were potentially over 21 billion cups that were falsely marked, Solo Cup theoretically faced more than $10 trillion in potential penalties under Pequignot’s interpretation.

As the case was winding its way through the courts, the Federal Circuit heard an appeal in an unrelated case Forest Group, Inc. v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 2009) that would ultimately spark a huge new cottage industry. Forest Group had a patent covering stilts commonly used in construction and sued Bon Tool for infringement of its patent. Bon Tool counterclaimed, alleging that Forest Group falsely marked its stilts. The court found that (1) Bon Tool did not infringe; (2) Forest Group had falsely marked some of its stilts and fined it $500 for a single offense of false marking; and (3) the case was not exceptional, so the court did not award attorney fees. Bon Tool appealed the last two findings, and the Federal Circuit determined that the fine under the false marking statute applies to each article falsely marked, not the decision to mark as the district court had held. (The Federal Circuit affirmed the decision not to award attorney fees). On remand, the district court imposed a fine of $180 for each of the 38 stilts that were falsely marked. Thus, the case that lit the false marking industry on fire and resulted in thousands of subsequent lawsuits was ultimately over a $6,840 fine.

Forest Group Launches a Thousand Suits

From 2007 to 2009, only 47 false marking cases had been filed in federal courts, but after the December 28, 2009 decision in Forest Group, patent attorneys and litigants stormed court houses across the country, filing almost 1,500 cases in the next year and a half. Given the potential $500 per article fine, companies that mass produced products were understandably concerned about facing potentially huge liability for wrongly marking their products.

Because false marking is a qui tam action and the statute appeared to authorize anyone to file suit, there was no need for patent attorneys to find clients who had been actually injured by the alleged false marking. Instead, patent attorneys were filing suit on their own or creating their own corporations to file suit against alleged false markers. The lawsuits tended to focus on products that had expired patent numbers, rather than products that were marked with inappropriate, but still valid, patent numbers. The reason was obvious—there was no need to go through the costly exercise of proving that the patent did not cover the product when the patent had expired. One could immediately jump to the question of whether the product was falsely marked with the intent to deceive the public.

Two later decisions by the Federal Circuit only intensified the flames sparked by the Forest Group decision. In Pequignot v. Solo Cup Co., 608 F.3d 1356 (Fed. Cir. 2010), the Court confirmed that marking a product with an expired patent number fell within the scope of the false marking statute (although it affirmed the judgment against Pequignot because he could not prove that Solo Cup acted with an intent to deceive). And, in Stauffer v. Brooks Brothers, Inc., 619 F.3d 1321 (Fed. Cir. 2010), the Court confirmed that anyone had standing to bring suit under the false marking statute, even if they did not suffer any direct personal injury.

The Federal Circuit appeared to be showing no inclination to beat back this fire. All indications were that a new form of patent “trolling” litigation was here to stay.

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Federal Circuit Affirms District Court Limiting the Number of Claims a Patentee Can Assert–Stamps.com Inc v. Endicia, Inc.

Posted on June 23, 2011 by | Comments Off on Federal Circuit Affirms District Court Limiting the Number of Claims a Patentee Can Assert–Stamps.com Inc v. Endicia, Inc.

by: Robert Wagner, intellectual property attorney at Picadio Sneath Miller & Norton, P.C.

In an interesting nonprecedential opinion issued this week in Stamps.com Inc. v. Endicia, Inc. (No. 10-1328), the Federal Circuit affirmed (among other things) the District Court’s decision to limit the number of claims a patentee could bring against an accused infringer. The Court held that the District Court did not abuse its discretion in arbitrarily limiting Stamps.com to asserting 15 claims against Endicia, as long as the District Court gave the patentee an opportunity to assert additional claims for good cause shown. While not a ground-breaking decision, the case is instructive for parties involved in litigating large numbers of patent claims.

The Case Below

Stamps.com sued Endicia for allegedly infringing 629 claims in 11 patents. Endicia moved the court to limit the number of claims, and the court agreed, limiting Stamps.com to 15 claims. The court did state, however, that it would remain flexible and revisit the limitation if Stamps.com could show good cause for needing to assert additional claims. The court then construed 10 claim terms in 15 claims from 7 patents. After briefing on summary judgment, the court invalidated the 7 claims.

Stamps.com then moved the court to pursue additional claims, which the court denied when it granted judgment for Endicia. Stamps.com appealed to the Federal Circuit, which affirmed and rejected Stamps.com’s challenge to the court’s 15-claim limitation, because of the “good cause” outlet the District Court provided.

Take Aways From This Case

This case confirms that trial courts have great discretion to manage their dockets, including limiting the number of claims that can be adjudicated, as long as the court provides some mechanism for a patentee to show good cause for adding additional claims. Thus, a defendant faced with allegations that it infringes hundreds or thousands of claims should consider moving the court to limit the number to a more manageable amount. At the same time, a patentee that finds itself limited to a subset of claims should take care to both choose the best claims to assert and be ready to show good cause for why additional claims may be necessary. Unfortunately, the Court did not identify what “good cause” would be sufficient to expand the number of claims asserted. Nonetheless, a patentee should begin to develop facts and arguments to be ready to use, if necessary.

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In re Klein–Federal Circuit Reverses Obviousness Rejection Because Non-Analogous Art Used

Posted on June 17, 2011 by | 1 comment

by: Robert Wagner, intellectual property attorney at Picadio Sneath Miller & Norton, P.C.

Last week, the Federal Circuit issued a rather interesting opinion in In re Klein, No. 2010-1411, reversing the Patent Office’s rejection of a hummingbird nectar mixer based on non-analogous art. The Court found that the five references were inappropriately used by the Patent Office because they were not analogous art and therefore not prior art under § 103.

What makes this case interesting is the fact that the invention in question, basically a cup with a moveable divider in it, is such a simple device. Under KSR, one would expect that such a simple mechanical device would be particularly vulnerable to obviousness challenges. In addition, the patentee included a purpose clause in his preamble, which many practitioners now avoid. By doing so though, it turned out to narrow the scope of his claim and protect him from the art cited against him by the Patent Office.

The Application

Mr. Klein applied for a patent on a device for mixing nectar for hummingbirds, orioles, and butterflies. The device (shown below) is basically a cup with a moveable divider. One side is filled with water, and the other with sugar. By moving the divider, the ratio of water to sugar changes creating nectars better suited for different animals.

The only independent claim recited:

21. A convenience nectar mixing device for use in preparation of sugar-water nectar for feeding hummingbirds, orioles or butterflies, said device comprising:

a container that is adapted to receive water,

receiving means fixed to said container, and

a divider movably held by said receiving means for forming a compartment within said container, wherein said compartment has a volume that is proportionately less than a volume of said container, by a ratio established for the formulation of sugar-water nectar for humming-birds, orioles or butterflies, wherein said compartment is adapted to receive sugar, and wherein removal of said divider from said receiving means allows mixing of said sugar and water to occur to provide said sugar-water nectar.

The particular nectar ratios used were admittedly well-known and not novel.

Only Analogous Art Can Be Used Under § 103 for Obviousness Determinations

The Court noted that “[a] reference qualifies as prior art for an obviousness determination under § 103 only when it is analogous to the claimed invention.” There are two separate tests for determining what defines the scope of analogous art:

  1. “whether the art is from the same field of endeavor, regardless of the problem addressed” and,
  2. “if the reference is not within the field of the inventor’s endeavor, whether the reference still is reasonably pertinent to the particular problem with which the inventor is involved.”

The issue in this case was the second test—what is reasonably pertinent to the particular problem—because the cited references were clearly not in the same field of endeavor.

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Federal Circuit Grants En Banc Rehearing in McKesson to Decide Joint Infringement Standard

Posted on May 27, 2011 by | Comments Off on Federal Circuit Grants En Banc Rehearing in McKesson to Decide Joint Infringement Standard

by: Robert Wagner, intellectual property attorney at Picadio Sneath Miller & Norton, P.C.

Yesterday, in McKesson Technologies Inc. v. Epic Systems Corp. (No. 2010-1291), the Federal Circuit granted McKesson’s petition for a rehearing en banc regarding the standards for joint infringement of a patent. This order comes just a little over a month after the Court granted a similar petition for a rehearing en banc in Akamai Technologies, Inc. v. Limelight Networks, Inc. (No. 2009-1372), which we discussed in an earlier post.

The Federal Circuit has apparently taken a special interest in the appropriate standards for imposing liability for joint infringement of a patent. Yesterday’s order expands the scope of the previous order and seeks briefing on two new issues:

  1. “If separate entities each perform separate steps of a method claim, under what circumstances, if any, would either entity or any third party be liable for inducing infringement or for contributory infringement? See Fromson v. Advance Offset Plate, Inc., 720 F.2d 1565 (Fed. Cir. 1983).”
  2. “Does the nature of the relationship between the relevant actors—e.g., service provider/user; doctor/patient—affect the question of direct or indirect infringement liability?”

The first question is almost identical to that posed in Akamai, but it phrases the question in terms of inducing infringement or contributory infringement, whereas the one posed in Akamai was directed to direct infringement. By doing so, the Federal Circuit will be addressing all potential forms of joint infringement of method claims. The second question expands the scope to address the question of the relationship between the parties, which was central to the Akamai panel’s determination that joint infringement requires some form of an agency relationship.

The underlying case

McKesson owns a patent directed to a method of communication between healthcare providers and patients that involves personalized web pages. Epic is a software company that developed a web-based software package that it licenses to healthcare providers to allow patients to view their medical records, scheduling information, and treatment plans.

The parties agreed that no single party performed every step of the allegedly infringed method claim, rather, the patients performed some steps and the medical provider performed others. Nonetheless, McKesson argued that Epic was liable under an induced infringement theory, which requires a direct infringer. McKesson argued that Epic’s customers (the doctors/healthcare providers) controlled or directed their patients to perform the missing steps in the claim, so that Epic directly infringed under a joint infringement theory.

Recognizing that there was no agency relationship between doctors and their patients, McKesson argued that the special nature of the doctor/patient relationship should also be sufficient to support joint infringement. The Court disagreed, finding no agency relationship or other contractual relationship under the standards discussed in Akamai. The Court then affirmed the district court’s grant of summary judgment for Epic.

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Federal Circuit Dramatically Overhauls Inequitable Conduct Defense in En Banc Therasense Decision

Posted on May 26, 2011 by | 1 comment

by: Robert Wagner, intellectual property attorney at Picadio Sneath Miller & Norton, P.C.

The Federal Circuit yesterday issued its en banc decision in Therasense, Inc. v. Becton, Dickinson & Co. that significantly changes the law of inequitable conduct. The 6-1-4 decision (written by Judge Rader, with a concurrence in part by Judge O’Malley and a dissent by Judge Bryson) creates bright-line rules for establishing the defense of inequitable that appear, as a practical matter, to almost eliminate this defense except in the most egregious (and likely difficult to prove) cases. In addition, under the Court’s decision, proving invalidity may be a precursor to a finding of inequitable conduct, thereby rendering this defense somewhat redundant. Below is a summary of the key points of the decision, along with a discussion of the consequences going forward.

The Defense of Inequitable Conduct

An accused infringer raising the defense of inequitable conduct must prove by clear and convincing evidence that the patentee misrepresented or omitted material information with the specific intent to deceive the PTO.

The Intent Element

To prevail on this defense, the accused infringer must prove that the patentee acted with the specific intent to deceive the PTO. Gross negligence or negligence are not sufficient. And, in the case of non-disclosure, the accused infringer must prove by clear and convincing evidence that the patentee made a deliberate decision to withhold a known material reference—that is, he knew of the reference, knew it was material, and deliberately decided to withhold it.

Intent and materiality are separate requirements. There is no “sliding scale,” and courts cannot infer intent solely from materiality. Therefore, proving that a patentee knew of a reference, should have known of its materiality, and decided not to submit it to the PTO does not prove specific intent to deceive.

Intent can be inferred from indirect and circumstantial evidence, but the specific intent to deceive must be the “single most reasonable inference able to be drawn from the evidence.”

The patentee need not offer any good faith explanation for its conduct until the accused infringer proves a threshold level of intent to deceive by clear and convincing evidence.

The Materiality Element

The Court rejected the standard of materiality defined in PTO Rule 1.56. Instead, it adopted a “but-for” materiality test.

“But-for” materiality must be shown by clear and convincing evidence, so an accused infringer must show that the PTO would not have allowed a claim if it had been aware of the undisclosed art. However, in making this determination, the court is to employ the PTO’s standard of patentability, not the judicial standard. Therefore, the court should apply the preponderance of the evidence standard used by the PTO and give claims their broadest reasonable construction. This creates a potential situation where a claim might not be invalid under an anticipation/obviousness defense at trial, but still could have been rejected by the PTO during prosecution.

“But-for” materiality is not required for affirmative acts of egregious misconduct, such as submitting false affidavits. However, the nondisclosure of prior art and the failure to mention prior art in an affidavit are not egregious misconduct. This type of misconduct still requires “but-for” materiality.

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Federal Circuit to Revisit Joint Infringement Standard En Banc in Akamai Case

Posted on April 22, 2011 by | 3 comments

by: Robert Wagner, intellectual property attorney at Picadio Sneath Miller & Norton, P.C.

Yesterday, the Federal Circuit issued an order in the Akamai Technologies, Inc. v. Limelight Networks, Inc. (Case. No. 2009-1372) matter granting Akamai’s petition for the Court to rehear the appeal en banc. The Federal Circuit will be revisiting the concept of joint infringement of method patents to determine who can be liable for infringement when more than one party performs the required steps of a method claim.

 Issues to Be Considered by the En Banc Court

The Federal Circuit requested that the parties address one issue in this en banc consideration: “If separate entities each perform separate steps of a method claim, under what circumstances would that claim be directly infringed and to what extent would each of the parties be liable?”

Method claims, unlike apparatus or device claims, involve the performance of certain steps, often in a certain sequence. Because these steps can occur at different times, more than one actor or entity potentially can perform the steps. Direct infringement requires that a single actor or entity perform all of the steps, so it would appear an easy way to avoid infringement is to simply have more than one person or entity perform the steps. Joint infringement is a doctrine that addresses the unfairness of having a single entity simply contract out steps of the method to avoid liability.

Previous decisions of the Federal Circuit (such as Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318) held that simply providing instructions to another was not enough to create liability. There has to be direction and control sufficient to impose vicarious liability on the party giving the instructions.

In the original Akamai panel decision, the Federal Circuit confirmed that joint infringement only exists when “there is an agency relationship between the parties who perform the method steps or when one party is contractually obligated to the other to perform the steps.” 629 F.3d 1311, 1320.

The en banc decision will shed light on the correct standard for joint infringement of a method claim, which will be extremely important going forward for both patent drafters and competitors in the marketplace. The Federal Circuit will presumably answer to what extent a person can be held liable for infringement in a variety of situations.

  •  When can giving another instructions that cause infringement create liability?
  • What kind of contractual or legal relationship between the parties must exist for joint infringement to be possible?
  • Does the “mastermind” have to have knowledge of the patent or infringement?
  • Does it matter if either party to the joint infringement receives some additional benefit for performing a step?

Regardless of the outcome of this case, as a matter of prudent practice, patent practitioners should be careful in drafting method claims to avoid the multi-actor problem that joint infringement is meant to address. In most circumstances, a patent can be carefully drafted so that only one actor is needed to perform all of the steps. By doing so, the prudent patent drafter can altogether avoid the problem of joint infringement.

 Case History

The underlying case involved a method Akamai patented for providing a scalable solution to hosting web content on multiple servers to increase the ability of a web site to handle large traffic. The system allowed a content provider to outsource the storage and delivery of discrete portions of its website content. To utilize this method, a content provider must tag certain portions of its website.

Limelight is a competitor of Akamai’s and offered similar capabilities to its customers. While it did not perform all of the steps found in Akamai’s patent, it contractually required its customers to perform several of these steps. Thus, the issue was whether Limelight and its customers together infringed Akamai’s patent.

Initially, the jury found that there was joint infringement and returned a $41.5 million verdict in favor of Akamai. The District Court granted Limelight’s JMOL of noninfringement and threw out the jury’s verdict in light of the Muniauction case. The Federal Circuit originally upheld the District Court in a unanimous decision, finding that there was no proof that Limelight’s customers were agent of Limelight and contractually required to perform certain steps. While Limelight provided instructions on how to use the system and contractually required its customers to act in certain ways if they wanted to use the system, the customers were acting on their own behalf and were not obligated to do anything if they did not want to use Limelight’s services. The Court found this to be “arms-length cooperation” and not an agency relationship.

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Patent Reissue as a Hedge Against Invalidity?

Posted on April 18, 2011 by | Comments Off on Patent Reissue as a Hedge Against Invalidity?

by: Robert Wagner, intellectual property attorney at Picadio Sneath Miller & Norton, P.C.

A recent decision from the Federal Circuit provides a boon for patent owners who are interested in filing suit against infringers but are concerned that their claims may be too broad to survive an invalidity attack. The decision in In re Takana (Case No. 2010-1262, April 15, 2011), allows a patent owner to file a reissue application before the US Patent and Trademark Office and add narrower claims to patent solely as a hedge against a potential invalidity challenge in future litigation.

A reissue application requires the patent owner to offer to surrender his or her patent and reopen the prosecution and amend the claims if the proposed changes were the result of an error and made without deceptive intent:

Whenever any patent is, through error without any deceptive intention, deemed wholly or partly inoperative or invalid, by reason of a defective specification or drawing, or by reason of the patentee claiming more or less than he had a right to claim in the patent.

The Patent Office determined that the patent owner could not simply add a dependent claim to his patent through the reissue process. The Federal Circuit disagreed and concluded that the patent owner’s desire to add a narrower dependent claim to his patent was an error–claiming less than he could have claimed during prosecution–and was not done with a deceptive intent. It found nothing improper with the reason for adding the narrower claim was a concern that a potential infringer might be able to invalidate the broad, original claims.

The decision creates a real opportunity for patent owners that want to enforce their patents through litigation, but are concerned that the claims were too broad as they were drafted to survive an invalidity attack. As with any such opportunity, there are drawbacks, however. A patent owner must offer to surrender the patent and reopen the prosecution of the patent. There is always the possibility that an examiner will discover a new reason the calls into question the validity of the patent. There are no guarantees that the surrendered patent will be allowed again. In addition, the patent statute provides for intervening rights that protect the public when a patent owner changes its patent after it has issued (either through reissue or reexamination). These intervening rights may grant absolute and equitable protections for products that were on sale before the patent owner added the new claims. Thus, a patent owner may not be able to enforce the patent against currently-selling products. Intervening rights generally provide fewer protections to future products, though.

This decision presents new opportunities for patent owners and an ability to correct older patents that contain novel ideas that may have been inartfully claimed.

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