Federal Circuit Cases Involving the ITC

Did you know...The defenses established under 35 U.S.C. § 271(g) are not available in the ITC?

By Eric Schweibenz
|
Feb
18
When asked to identify the major differences between patent litigation in the ITC and in federal district court, most practitioners would likely identify 1) the domestic industry requirement and 2) the form of relief (injunctive relief but no money damages).  Another difference is that certain defenses to infringement are not available to respondents in the ITC. In Certain Abrasive Products Made Using a Process for Making Powder Preforms, and Products Containing Same (Inv. No. 337-TA-449), the ITC determined that with respect to the offshore practice of a patented product, the defenses to infringement under 35 U.S.C. § 271(g) are not available to respondents in infringement actions before the ITC.  Respondent Kinik asserted a defense to infringement under § 271(g) because even if its process were found to include all of the steps of the patent claims, it asserted that the product of those steps was “materially changed by subsequent processes” and thus placed Kinik within the exception of § 271(g)(1). In rendering its decision, the ITC relied primarily upon the legislative history of the Process Patent Amendments Act of 1988 which states, in adding § 271(g), that “the amendments made by this subtitle shall not deprive a patent owner of any remedies available . . . under section 337 of the Tariff Act of 1930, or under any other provision of the law.”  The ITC also cited legislative history in which it was stated that the statute was intended to provide patent owners with a new right to sue for damages “in Federal district court when someone, without authorization, uses or sells in the United States, or imports into the United States a product made by their patented process.”  The ITC further relied upon the Senate Report which provided that there was no “intention for these provisions to limit in any way the ability of process patent owners to obtain relief from the U.S. International Trade Commission.” On appeal to the Federal Circuit, Kinik argued that the defenses of § 271(g) should apply in Section 337 actions because Section 337(c) states that all legal and equitable defenses may be presented in ITC actions.  Kinik also argued that it was anomalous to create a legislative distinction in the defenses available in different tribunals.  As set forth in Kinik Co. v. ITC, 362 F.3d 1359 (Fed. Cir. 2004), the Federal Circuit disagreed with Kinik, and affirmed the ITC’s ruling.  It found that the ITC’s interpretation of the statute was supported by the text, the legislative history, and by precedent.  It also noted that, to the extent there was any uncertainty or ambiguity in the interpretation of the statute, deference should be given to the view of the agency that is charged with its administration.
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Federal Circuit to Hear Oral Argument in Erbe Elektromedizin GmbH Appeal

By Eric Schweibenz
|
Mar
30
On April 3, 2009, the Federal Circuit is scheduled to hear oral argument in Erbe Elektromedizin GmbH v. ITC. Erbe Elektromedizin GmbH (“Erbe”) filed a complaint with the ITC against Canady Technology, LLC et al. (“Canady”) on April 10, 2006 alleging violation of Section 337 by Canady’s importation and sale of certain endoscopic probes for use in argon plasma coagulation (“APC”) systems that coagulate bleeding tissue during electrosurgery.  After the Commission instituted an investigation (337-TA-569) and an evidentiary hearing was held, ALJ Bullock issued an initial determination (“ID”) on January 16, 2008 in which he construed the claim terms “predetermined minimum safety distance,” “working channel” and “sidewardly” of the patent-in-suit and concluded that Erbe failed to establish that (1) there was a domestic industry, (2) the asserted claims were directly infringed, and (3) Canady had induced or contributed to infringement even if the asserted claims were directly infringed.  On January 28, 2008, Erbe filed a petition for review of the ID which the Commission granted in part, but the ID was upheld on March 17, 2008.  Erbe filed its Notice of Appeal to the Federal Circuit on May 14, 2008. According to Erbe’s opening and reply briefs, the issues on appeal are (1) whether the ITC erred by failing to find that Erbe established a domestic industry for the patent-in-suit, and (2) whether the ITC erred by failing to find that Canady violated Section 337 by importing and/or selling certain endoscopic probes for use in APC systems as claimed in the patent-in-suit. Erbe argues that the Commission’s decision should be reversed and remanded because (1) the Commission incorrectly construed “predetermined minimum safety distance” so as to exclude from those probes “tubes” having temperature resistant extensions to the plastic tube, (2) the Commission should have properly construed “working channel” to mean “a channel of an endoscope through which work is performed,” where “work” includes visualization through an optical means, coagulation of tissue, irrigation, inflation and suction, (3) the Commission properly construed “sidewardly” but failed to apply that proper construction of the term in its infringement analysis, (4) the Commission’s failure to properly construe “predetermined minimum safety distance” and “working channel,” and its misapplication of the construction of “sidewardly,” was legal error that fatally infected its infringement analysis, and (5) the Commission’s failure to properly construe “predetermined minimum safety distance” and “working channel” was legal error that fatally infected its domestic industry analysis. For its part, the Commission frames the issues in its brief as (1) whether it correctly construed the disputed claim terms, (2) whether its finding of no direct infringement is supported by substantial evidence because Erbe failed to show any specific instances in which the accused probes were used in an infringing manner, (3) whether its alternative findings of no contributory or induced infringement by Canady is supported by substantial evidence because Erbe failed to establish by a preponderance of the evidence that the accused probes are not suitable for substantially non-infringing uses, and (4) whether its finding of no domestic industry practicing the asserted claims is supported by substantial evidence because Erbe has not shown that any of the claims have been practiced in the U.S.  The Commission argues that it correctly construed the claim terms “working channel” and “sidewardly,” and properly applied its construction of these claims to find no contributory or induced infringement and no domestic industry that practices the asserted claims of the patent-in-suit. In Canady’s (intervenor) brief, Canady argues that (1) the Commission properly considered the intrinsic evidence and construed the disputed claim terms in accordance with their ordinary meaning, (2) the Commission correctly concluded that Erbe failed to prove direct, contributory or induced infringement, and (3) the Commission correctly concluded that Erbe failed to satisfy the technical prong of the domestic industry requirement.
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Federal Circuit Denies Petition for Writ of Mandamus in Certain Semiconductor Integrated Circuits Using Tungsten Metallization (337-TA-648)

By Eric Schweibenz
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Apr
07
On April 2, 2009, the Federal Circuit issued a non-precedential order denying Respondent Cypress Semiconductor Corporation’s (“Cypress”) petition for a writ of mandamus directing the Commission to halt its investigation in the matter of Certain Semiconductor Integrated Circuits Using Tungsten Metallization and Products Containing Same (337-TA-648). The patent-in-suit held by Complainants Agere Systems Inc. and LSI Corporation (“Agere”) was previously the subject of an infringement suit brought by Agere against Atmel Corporation in the Eastern District of Pennsylvania, which ruled the patent invalid.  After judgment was entered, the parties settled and, on motion, the district court vacated its summary judgment orders, the jury verdict and the judgment.  When Agere then submitted a complaint to the Commission alleging infringement of the same patent, Cypress filed a motion for summary determination arguing that Agere is precluded from relitigating validity in light of the district court’s rulings.  The ALJ denied the motion, and the Commission affirmed. Cypress argued in its petition to the Federal Circuit that Third Circuit law should govern the preclusion question because the vacated judgment was issued by the Eastern District of Pennsylvania, and that Third Circuit law provides that the vacated judgment retains preclusive effect.  Cypress argued in the alternative that if the court applies Federal Circuit law, it should rule that the vacated judgment retains collateral estoppel effect and precludes Agere from asserting the patent before the Commission. Agere argued that Federal Circuit law governs because the question is whether the Commission should give preclusive effect to the judgment, not whether the judgment was correctly vacated.  The Commission argued that Federal Circuit law governs because the controlling law on procedural matters such as preclusion is that of the circuit to which an appeal would normally lie, which for appeals of Commission decisions is the Federal Circuit.  Both Agere and the Commission cited Federal Circuit law providing that a vacated judgment has no preclusive effect. The Federal Circuit agreed with Agere and the Commission and applied Federal Circuit law to the res judicata issue, which provides that vacatur of a judgment generally “clears the path for future relitigation of the issues between the parties and eliminates a judgment.”  The court noted that it was skeptical as to whether the vacated judgment could bar Agere from asserting its patent before the Commission, but it did not decide the issue.  The court held only that Cypress did not meet its burden of showing that the Commission clearly and indisputably erred in ruling that it may proceed with its investigation.
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Federal Circuit Vacates and Remands On Patent Misuse Issues in Princo Corp. Appeal (2007-1386)

By Eric Schweibenz
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Apr
21
On April 20, 2009, the Federal Circuit issued its Opinion in Princo Corp. v. Int’l Trade Comm’n, No. 2007-1386.  This was an appeal from the Commission’s ruling in Certain Recordable Compact Discs & Rewritable Compact Discs (Inv. No. 337-TA-474) that Princo Corp. and Princo America Corp. (“Princo”) had violated Section 337 through the importation of compact discs that infringed six patents owned by U.S. Philips Corp. (“Philips”).  At the ITC, Princo conceded infringement but made two distinct arguments that Philips’ patents were unenforceable due to patent misuse.  The Commission found both patent misuse arguments unpersuasive and held that Princo had violated section 337.  Princo appealed to the Federal Circuit. In the opinion, the Federal Circuit affirmed the Commission’s rejection of Princo’s first patent misuse argument but vacated and remanded with respect to the Commission’s rejection of the second patent misuse argument. The patents at issue all relate to the “Orange Book” standard for CD-R and CD-RW discs that was jointly developed by Philips and Sony in the 1980s and early 1990s.  While the standard was being developed, Philips, Sony, and others agreed to pool their patents and authorize Philips to grant package licenses to the pooled patents (with all of the patent owners sharing in the royalties). Philips’ U.S. Patent Nos. 4,999,825 and 5,023,856 (the “Raaymakers patents”) and Sony’s U.S. Patent No. 4,942,565 (the “Lagadec patent”) are the particular patents giving rise to Princo’s patent misuse contentions.  According to the opinion, the Raaymakers patents are undeniably part of the core technology for the “Orange Book” standard.  The Lagadec patent, on the other hand, is for the most part incompatible with the standard because it teaches a digital method for encoding timing information in CD-R and CD-RW discs, as opposed to the analog method that is taught by the Raaymakers patents and is part of the official standard.  However, one claim of the Lagadec patent can be read broadly so as to encompass both the analog method and the digital method. Against this backdrop, Princo made two separate patent misuse arguments.  First, it argued that Philips’ and Sony’s patent pool constituted an illegal tying arrangement because the Lagadec patent was not necessary to practice the “Orange Book” standard, and therefore the requirement that Princo license that patent along with the patents that were truly necessary to practice the standard (e.g., the Raaymakers patents) was a misuse of the necessary patents.  The Federal Circuit rejected this argument, affirming the finding of the Commission, since the Lagadec patent had at least one claim that might have read on the “Orange Book” standard, the Lagadec patent qualified as an “essential” patent for purposes of the standard, and thus the pooling did not constitute an illegal tying arrangement and was not patent misuse. The Federal Circuit found Princo’s second patent misuse argument persuasive, however, and remanded to the Commission for further analysis.  This second argument alleged that Philips and Sony had entered into an illegal agreement not to compete – a classic antitrust violation – by agreeing never to license the Lagadec patent separately from the other patents in the pool. According to Princo, by never licensing the Lagadec patent outside the “Orange Book” patent pool, Philips and Sony effectively stifled any potential development of the Lagadec digital method into a viable technology that could compete with the “Orange Book” standard.  The Federal Circuit found that this argument had merit, but remanded to the Commission for a determination of whether there was in fact an agreement between Philips and Sony to prevent the licensing of the Lagadec patent as a competitor to the “Orange Book” standard, and whether the Lagadec technology was truly a potentially viable alternative to the standard.
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Federal Circuit to Hear Oral Argument in Norgren Appeal

By Eric Schweibenz
|
Apr
28
On May 4, 2009, the Federal Circuit is scheduled to hear oral argument in Norgren Inc. v. ITC (2008-1415).  Please note that Oblon Spivak represents SMC Corporation and SMC Corporation of America (“SMC”) in this matter. By way of background, on October 6, 2006, Norgren Inc. (“Norgren”) filed a complaint with the ITC against SMC alleging violation of Section 337 by SMC’s importation and sale of certain connecting devices or clamps that connect together modular filters, regulators and lubricators (“FRLs”) used for conditioning compressed air in pneumatic systems.  After the Commission instituted an investigation (337-TA-587) and an evidentiary hearing was held, ALJ Carl C. Charneski issued an initial determination (“ID”) on February 13, 2008 in which he found no violation of Section 337 because SMC’s accused connectors do not receive generally rectangular ported flanges of the FRLs as required by the patent-in-suit.  Norgren petitioned for review, and the Commission rendered a final decision on April 14, 2008 adopting the ALJ’s ID.  Norgren appealed the Commission’s decision. According to Norgren’s opening and reply briefs, the issues on appeal are:  (1) whether the ALJ improperly construed the term “generally rectangular ported flange” of the asserted claims by imposing the limitation that the flange must have four projecting rims; (2) whether the ALJ improperly limited the scope of claim 9 by excluding the FRLs to which the clamp is connected; (3) whether the ALJ erred in finding no literal infringement; and (4) whether the ALJ erred in finding non-infringement under the doctrine of equivalents.  Specifically, Norgren argues that the Commission incorrectly construed the terms “generally rectangular ported flange” and “adapted to engage the pair of ported flanges” to require the flanges to have four projecting rims because the patent specification teaches that the flange is the entire feature formed on the bodies of the FRLs and not just the part enclosed in the clamp, and that four projecting rims are not necessary for the proper function of the clamp. According to the Commission’s brief, the issues on appeal are:  (1) whether the ALJ properly construed the term “generally rectangular ported flange;” (2) whether Norgren waived challenges to the finding of no literal infringement based on the construction of the term “generally rectangular ported flange” because of its failure to raise such challenges in its petition for review to the Commission; and (3) whether the Commission’s finding of non-infringement under the doctrine of equivalents should be affirmed because Norgren has not challenged the finding of estoppel under Festo.  Specifically, the Commission argues that:  (1) the ALJ’s claim construction is supported by the intrinsic evidence as well as the extrinsic evidence; (2) the ALJ properly applied the correctly construed claims and the facts in record to find no literal infringement; (3) the only literal infringement issue raised by Norgren in its petition for review concerned the proper construction of “generally rectangular ported flange” and, therefore, its arguments raised for the first time on appeal that the ALJ erred in finding that the scope of claim 9 does not cover FRLs or larger pneumatic systems that incorporate FRLs, and in attributing no weight to an “altered” exhibit, are not properly before the Court, and (4) the Commission’s finding of non-infringement under the doctrine of equivalents should be affirmed because Norgren makes no argument that the Commission erred in the application of Festo. In SMC’s (intervenor) brief, SMC argues that:  (1) the Commission’s construction of “generally rectangular ported flange” is correct and its determination that SMC’s connector is not adapted to receive a generally rectangular ported flange as required by the asserted claims is supported by substantial evidence; (2) the “pivotally mounted” limitation should be construed to require a hinged connection with no loose parts; (3) the asserted claims would have been obvious under KSR because there is no dispute that the claims are directed to a combination of old elements with no new or unpredictable result and that the prior art discloses a hinged connector with no loose parts; and (4) Norgren’s new arguments raised on appeal for the first time should be deemed waived.
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Federal Circuit Issues Opinion In Amgen Appeal (2007-1014)

By Eric Schweibenz
|
May
01
On April 30, 2009, the Federal Circuit issued a per curiam opinion in Amgen, Inc. v. ITC, No. 2007-1014.  Sitting en banc, Judges Newman, Lourie and Linn revised a portion of the March 19, 2008 opinion issued in this case. By way of background, Amgen holds several U.S. patents relating to recombinant human erythropoietin and derivatives (“EPO”) and processes for making EPO.  Roche produces EPO in Europe and was seeking FDA approval for its own EPO drug in the U.S.  As part of its effort to generate data for its regulatory submissions to the FDA, Roche began importing EPO into the U.S.  Roche continued importing EPO after its FDA application was complete, although not for sale or contract to sell in the U.S.  Amgen initiated a Section 337 action, asserting that Roche’s imported EPO and the process by which it is produced in Europe are covered by one or more claims of six of Amgen’s U.S. patents. In response, Roche moved for summary determination of non-infringement on the ground that the imported EPO is exempt from infringement by operation of 35 U.S.C. § 271(e)(1) which excuses infringing uses of a patented invention that “reasonably relate to the development and submission of information under a Federal Rule which regulates the manufacture, use, or sale of drugs or veterinary biological products.”  In other words, § 271(e)(1) provides a “safe harbor” from claims of patent infringement based on activities reasonably related to the pursuit of FDA approval of drug products.  The ITC determined that Roche’s activities fell within the safe harbor of § 271(e)(1), including the foreign production of the imported EPO and thus did not infringe Amgen’s U.S. patents. On appeal, Amgen made three arguments: (1) § 271(e)(1) provides no exemption for the importation of articles made abroad by patented processes in Section 337 actions; (2) § 271(e)(1) does not provide blanket protection for all pre-FDA-approval conduct; and (3) the ITC has jurisdiction whenever sale of the accused product is imminent.  In its 2008 opinion, the Federal Circuit unanimously agreed with Amgen in connection with its second and third arguments, but the majority disagreed with Amgen on its first argument.  With respect to Amgen’s first argument, the majority accepted the ITC’s position that § 271(e)(1)’s safe harbor provision should operate the same in ITC actions as in district court litigation.  This decision was made despite the Federal Circuit’s opinion in Kinik Co.v. ITC, distinguishing between the Patent Act and the Tariff Act with regard to importation of a product made by a patented process as it applies to 35 U.S.C. § 271(g).  Noting that while the importation of a product made by an infringing process constitutes infringement under § 271(g), the Federal Circuit stated that § 271(e)(1) exempts from infringement certain acts reasonably related to obtaining regulatory approval by the FDA.  Accordingly in its 2008 opinion, the Federal Circuit held that Roche’s imported EPO was not subject to exclusion based on infringement of Amgen’s product or process patents, to the extent that the imported EPO was used to develop information that was reasonably related to the submission of information to the federal regulatory authority. Following the 2008 opinion, Amgen petitioned for a rehearing en banc.  Granting the petition for the limited purpose of reviewing a portion of the previous opinion, the Federal Circuit affirmed the ITC’s ruling that the safe harbor provided by § 271(e)(1) applies in ITC proceedings under Section 337 relating to process patents as well as product patents, for imported product that is used for the exempt purposes.  Amgen argued otherwise, noting the long-standing authority of Section 337 to reach importation based on offshore practice of a U.S. patented process, and asserting that Congress intended to limit the safe harbor provision to process patents that would be enforced under § 271(g).  Specifically, Amgen stated that the ITC’s authority was not changed by enactment of § 271(g), in that process patent infringement would give way to the safe harbor when enforced in the district courts under Section 271(g), while remedy is retained for process patent infringement enforced under Section 337 at the ITC.  Despite such arguments, the Federal Circuit held that the ITC’s ruling is consistent with congressional policy as set forth in enactment of § 271(g), and as elaborated by the Supreme Court in its applications of the safe harbor statute in Merck v. Lifesciences I, Ltd. and Eli Lilly & Co. v. Medtronic, Inc.  Thus, the majority affirmed the ITC’s ruling that § 271(e)(1) applies to process patents in ITC actions under Section 337, and held that the safe harbor provision insulates the Roche EPO from Section 337 exclusion to the extent the EPO is used for the development of information for submission to the FDA. The Federal Circuit remanded the case to the ITC because the evidence Roche presented about its activity with the EPOs was “conflicting and required closer analysis than it received.”  It directed the ITC to “consider the exempt status of each study for which question has reasonably been raised.” In a separate opinion concurring in part and dissenting in part with the majority opinion, Judge Linn stated that the majority overstepped its authority in assuming that Congress meant for process patents to be granted the same safe-harbor protections as product patents.
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Federal Circuit Issues Opinion in Erbe Elektromedizin GmbH Appeal (2008-1358)

By Eric Schweibenz
|
May
19
On May 19, 2009, the Federal Circuit issued its opinion in Erbe Elektromedizin GMBH v. ITC, No. 2008-1358.  Judge Dyk, sitting on a panel with Chief Judge Michel and Judge Rader, affirmed the ITC’s claim construction and findings of no infringement. By way of background, the ITC instituted the underlying investigation (Certain Endoscopic Probes for Use in Argon Plasma Coagulation Sys., 337-TA-569) based on Erbe Elektromedizin GmbH and ERBE USA, Inc.’s (collectively, “Erbe”) April 10, 2006 complaint against Canady Technology, LLC and Canady Technolology Germany GmbH (collectively, “Canady”), alleging violation of Section 337 by Canady’s importation and sale of certain endoscopic probes for use in argon plasma coagulation (“APC”) systems that coagulate bleeding tissue during electrosurgery.  As we explained in our March 30 post, oral arguments in this matter were heard by the Federal Circuit on April 3, 2009. The asserted claims of U.S. Patent No. 5,720,745 (the “‘745 patent”) required an endoscope with multiple “working channels,” extending between the ends of the endoscope.  The ITC had previously interpreted “working channels” as “a channel through which a device that performs work may be inserted.”  The ITC additionally found no evidence that any endoscopy probes sold to Canady’s customers were used with multiple “working channel” endoscopes, and that absent evidence of direct infringement by Canady’s customers, there could be no contributory or induced infringement by Canady. On appeal, the parties agreed that if the Federal Circuit affirmed the ITC’s claim construction of “working channel,” that no other issue raised on appeal needed to be addressed, since under the ITC’s claim interpretation, the endoscopes in question only had a single “working channel.” Erbe argued that “working channel” should be more broadly construed “to mean ‘a channel of an endoscope through which work is performed,’ where ‘work’ includes visualization through an optical means, coagulation of tissue, irrigation, inflation, and suction.”  The fundamental disagreement between the parties boiled down to whether fixed optics constitute a “working channel,” since some of the probes sold by Erbe were used with a fixed optics endoscope. The Federal Circuit first considered two figures from the ‘745 patent, each of which labeled an optical lens separately from two “working channels.”  For example, figure 1 of the ‘745 patent labels the optical lens as element 5, and separately labels two “working channels as elements 6 and 7.  Citing Phillips, the Federal Circuit also consulted a dictionary definition of “working,” as “activity in which one exerts strength or faculties to do or perform.”  This suggested to the Federal Circuit that a “working channel” is not stationary (as with a fixed optics installation) but a channel through which work or activity may be done during the procedure. Erbe argued that claim 1 of the ‘745 patent acknowledges that fixed optics could constitute a “working channel,” since the claim requires “optical means positioned within a second working channel of the endoscope.”  The Federal Circuit remained unconvinced, and noted that “in light of the figures showing that a fixed optics installation is not a ‘working channel,’ claim 1 must be construed to refer to movable, not fixed, optics.  The fact that the optics are described as “positioned” does not suggest that they are fixed rather than movable.”  The Federal Circuit additionally found that the ‘745 specification contemplated movable optics, and noted uncontroverted testimony in the record that movable optics were well-known and widely used at the time of the patent application. In view of the party’s agreement that the accused devices have only a single “working channel” if the fixed optics are not a “working channel,” the Federal Circuit affirmed the ITC’s final determination and held that the ITC correctly concluded that there was no evidence of direct infringement and thus no basis for finding induced or contributory infringement.
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Federal Circuit Affirms-in-Part, Reverses-in-Part and Remands in Epistar Appeal (2007-1457)

By Eric Schweibenz
|
May
26
On May 22, 2009, the Federal Circuit issued its opinion in Epistar Corp. v. Int’l Trade Comm’n, No. 2007-1457.  This was an appeal from the Commission’s final determination in Investigation No. 337-TA-556, which held that Epistar’s LED products infringed U.S. Patent No. 5,008,718 (“the ‘718 Patent).  The’718 patent is owned by Philips Lumileds Lighting Co. LLC (“Lumileds”).  At the ITC, Epistar attempted to argue that the ‘718 patent was invalid and the parties disagreed on the claim constructions for two terms.  The Commission found that Epistar had waived its right to argue that the ‘718 patent was invalid due to a settlement agreement signed by its subsidiary.  After the Commission ruled against Epistar’s construction of two claim terms, it found that Epistar’s products infringed and issued a Limited Exclusion Order (“LEO”) prohibiting the importation of Epistar’s LED products, regardless of the manufacturer or importer of those products.  Epistar appealed to the Federal Circuit. In the opinion, the Federal Circuit reversed the Commission’s decision that Epistar could not raise the defense of patent invalidity, affirmed the Commission’s claim construction, and reversed the grant of the LEO.  The Federal Circuit remanded the case to the ITC so that Epistar could raise its invalidity defense and reconsider the grant of the LEO. The Commission found that Epistar was estopped from raising an invalidity defense because its subsidiary (“UEC”), before it was purchased by Epistar, had entered into a settlement agreement with Lumileds, in which it agreed that it would not raise an invalidity defense to the ‘718 patent.  The Commission so ruled, even though there had previously been a settlement agreement between Epistar and Lumileds, in which Epistar had not waived its right to raise an invalidity defense to the ‘718 patent.  The Federal Circuit reversed because it found under California law (there was a California choice of law provision in both settlement agreements) that the agreement with UEC only applied to UEC products and not to Epistar products.  Consequently, it remanded the case so that Epistar could assert an invalidity defense.  Epistar also appealed the Commission’s construction of two claim terms:  “transparent window layer” and “substrate.”  (Epistar did not separately appeal the finding of infringement.)  The Federal Circuit affirmed both constructions.  Regarding ‘transparent window layer,” the Federal Circuit held, that while the specification may have been critical of the use of a substance called indium-tin-oxide (“ITO”), it did not expressly disclaim using that substance.  Thus, the Federal Circuit affirmed the Commission’s ruling that the scope of “transparent window layer” included ITO. Regarding “substrate,” Epistar argued that the term should be limited to a single, thicker layer.  (The Commission modified the ALJ’s construction of this term.)  The Federal Circuit affirmed because, while there was a specific embodiment in the specification that described such a substrate, “the disclosure of a preferred or exemplary embodiment encompassing a singular element, does not, without more, disclaim a plural element.” Finally, although the issue had not been briefed, the Federal Circuit reversed and remanded the grant of the LEO due to an intervening case.  In Kyocera Wireless Corp. v. ITC, 545 F.3d 1340 (Fed. Cir. 2008), which issued after oral argument in this case, the Federal Circuit “held that the ITC lacks statutory authority to issue a LEO that excludes imported products by entities not named as respondents before the ITC.”  Thus, the Federal Circuit held that under Kyocera, it was improper for the Commission to issue the LEO against third parties who were not respondents below.  Consequently, the Court reversed the grant of the LEO and remanded for the Commission to reconsider who the LEO should apply to in light of Kyocera.
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Federal Circuit Issues Opinion in Linear Technology Corporation Appeal (2008-1117)

By Eric Schweibenz
|
May
26
On May 21, 2009, the Federal Circuit issued its opinion in Linear Technology Corporation v. ITC, No. 2008-1117.  Judge Schall, sitting on a panel with Judge Mayer and Judge Lourie affirmed-in-part, reversed-in-part, vacated-in-part and remanded the case to the ITC for further proceedings. By way of background, the ITC instituted the underlying investigation (Certain Voltage Regulators, Components Thereof and Products Containing Same, 337-TA-564) based on Linear Technology Corporation’s (“Linear”) complaint against Advanced Analogic Technologies, Inc. (“AATI”) alleging violation of Section 337 by AATI’s importation and/or sale for importation of certain electronic voltage regulator products that infringed U.S. Patent No. 6,580,258 (the “‘258 patent”). On May 22, 2007, the Administrative Law Judge issued an Initial Determination (“ID”), finding that AATI did not violate section 337, either because its accused products did not infringe the asserted claims or because asserted claim 35 was invalid.  On review, the ITC determined that (1) certain AATI accused products did not infringe claims 2, 3, 34 or 35, (2) claims 2, 3, and 34 were not anticipated by a reference entitled “Application Not 35 - Step Down Switching Regulators” (“AN35”), and (3) claim 35 was invalid as anticipated by a product from Maxim Integrated Products, Inc. Regarding claim construction, there were five claim terms in dispute on appeal and the Federal Circuit affirmed the ITC’s interpretation of the first four disputed claim terms, but ruled that it improperly narrowed the “monitoring the current to the load” limitation in claim 35 of the ‘258 patent.  Specifically, the Federal Circuit determined that this limitation “can be satisfied by monitoring voltage to indirectly monitor current.” The Federal Circuit next addressed the ITC’s infringement rulings.  Linear argued that the ITC’s finding of infringement regarding AATI’s AAT1143 product should be affirmed and the ITC’s finding of non-infringement regarding AATI’s products AAT1146, AAT1151 and AAT1265 should be reversed.  The Federal Circuit affirmed the ITC’s findings for the AAT1143, partially affirmed the findings for AAT1151 and AAT1265, and reversed the ITC’s finding on AAT1146. In affirming the ITC’s infringement finding on AAT1143, the Federal Circuit was swayed by the circuit schematics, graphs of the device in operation, and expert testimony regarding the product.  Accordingly, the Federal Circuit found substantial evidence supporting the ITC’s infringement finding.  In view of the similarity between AATI’s AAT1143 and AAT1146 products, the Federal Circuit also reversed the ITC’s finding of noninfringement of the AAT1146 device since such finding was not supported by substantial evidence. The Federal Circuit’s decision to affirm the ITC’s finding of noninfringement of claims 2 and 3 of the ‘258 patent by the AAT1151 and AAT1265 devices was based on the fact that these devices lacked ZC comparator circuitry and thus did not meet the required “third circuit” limitation.  Regarding the ITC’s determination that the AAT1151 and AAT1265 products did not infringe claim 34 of the ‘258 patent, however, the Federal Circuit determined that the ITC’s findings were “internally inconsistent and not supported by substantial evidence.”  Thus, the Federal Circuit vacated the ITC’s finding of noninfringement with regard to claim 34 and remanded so that the ITC could consider whether there was infringement. On cross appeal, AATI requested the Federal Circuit reverse the ITC’s determination that claims 2, 3, and 34 were not anticipated by AN35.  However, the Federal Circuit agreed with the ITC’s determination that the AN35 reference could not anticipate the claims because it did not show a synchronous switching voltage regulator including two transistors as required by the construed claims. Lastly, the Federal Circuit reviewed the ITC’s determinations that claim 35 of the ‘258 patent was not infringed by the AAT1143 and AAT1146 products, as well as its ruling that claim 35 was invalid.  The Federal Circuit held that the ITC’s determinations were not supported by substantial evidence since, as noted above, such determinations were based on an incorrect claim construction of the “monitoring the current to the load” limitation in claim 35 of the ‘258 patent.  Accordingly, the Federal Circuit vacated the ITC determinations in this regard and remanded for further proceedings.
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Federal Circuit Issues Opinion In Norgren Appeal (2008-1415)

By Eric Schweibenz
|
May
28
On May 26, 2009, the Federal Circuit issued its opinion in Norgren Inc. v. ITC (2008-1415) which reversed-in-part, vacated-in-part, and remanded the ITC’s final determination of no violation in this case.  Please note that Oblon Spivak represents SMC Corporation and SMC Corporation of America (“SMC”) in this matter. By way of background, on October 6, 2006, Norgren Inc. (“Norgren”) filed a complaint with the ITC against SMC alleging violation of Section 337 by SMC’s importation and sale of certain connecting devices or clamps that connect together modular filters, regulators, and lubricators (“FRLs”) used for conditioning compressed air in pneumatic systems.  On February 13, 2008, ALJ Carl C. Charneski issued an initial determination (“ID”) in which he found no violation of Section 337 because SMC’s accused connectors did not receive generally rectangular ported flanges of the FRLs as required by the patent-in-suit.  Norgren petitioned for review, and the Commission rendered a final decision on April 14, 2008 adopting the ALJ’s ID. In its opinion, the Federal Circuit agreed with Norgren’s position that the ITC incorrectly construed the term “generally rectangular ported flange” to require the flanges to have projections on all four sides.  According to the Federal Circuit, “[n]othing in the claims, written description or prosecution history requires four projecting rims.”  Citing Phillips, the Federal Circuit determined that the “generally rectangular ported flange” of the asserted claims of the ‘392 patent is not limited to a flange having four projecting rims.  Rather, according to the Federal Circuit, the “generally rectangular” language pertains to the overall shape of the flange.  The Federal Circuit further determined that          “[a]lthough it is possible for a four-sided, generally rectangular clamp to engage each generally rectangular flange on all four sides, nothing in the claims or the rest of the specification requires that every side contain a rim.” The Federal Circuit reversed the ITC’s noninfringement determination because it found that SMC’s accused connectors are ported and generally rectangular and they have two “mounting ears,’ i.e., two projecting rims.”. Intervenor SMC asserted that the Federal Circuit could affirm the ITC determination of no violation by concluding that the ITC erred in finding that the ‘392 patent is nonobvious.  The Federal Circuit determined, however, “that the ALJ should evaluate obviousness in the first instance under the correct construction of ‘generally rectangular ported flange’ – i.e., a construction that does not require a flange having projections on all four sides.”
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Federal Circuit To Hear Oral Argument In Crocs’ Appeal On July 10

By Eric Schweibenz
|
Jul
02
On July 10, 2009, the Federal Circuit is scheduled to hear oral argument in Crocs, Inc. v. ITC (2008-1596). Crocs, Inc. (“Crocs”) filed a complaint with the ITC on March 31, 2006, and an amended complaint on April 27, 2006, against Collective Licensing International, LLC et al. alleging violation of Section 337 by the respondent’s importation and sale of certain foam footwear.  After the Commission instituted an investigation (337-TA-567) and held an evidentiary hearing, ALJ Charles E. Bullock issued an initial determination (“ID”) on April 11, 2008, in which he concluded that there was no violation of section 337 because: (1) U.S. Patent No. D517,789 (“the ‘789 patent”) was not infringed by the respondents’ shoes; (2) Crocs’ shoes did not satisfy the technical prong of the domestic industry requirement relating to the ‘789 patent; and (3) U.S. Patent No. 6,993,858 (“the ‘858 patent”) was invalid due to obviousness as proven by clear and convincing evidence.  Complainant Crocs, respondent Collective Licensing International, LLC, Effervescent Inc. and Holey Soles Holding Ltd. (collectively “CLI”), and the Commission investigative attorney (“IA”) filed petitions for review of the ID.  Respondents Gen-X Sports, Inc. (“Gen-X Sports”) and Double Diamond Distribution Ltd (“Double Diamond) subsequently filed joinders to CLI’s petition.  The Commission granted the petitions in part and upheld the ID on July 25, 2008 with modifications and clarifications set forth in a separately issued Opinion.  Crocs appealed the Commission’s decision to the Federal Circuit. According to Crocs’ opening and reply briefs, Crocs appeals: (1) the Commission’s determination that the accused foam footwear products of the respondents do not infringe the ‘789 patent; (2) the Commission’s claim construction for the ‘789 patent, which led to the erroneous finding of non-infringement; (3) the Commission’s determination that an industry in the United States does not exist with respect to Crocs’ products that are protected by the ‘789 patent, as required by 19 U.S.C. § 1337(a)(3); and (4) the Commission’s determination that claims 1 and 2 of the ‘858 patent are invalid under 35 U.S.C. § 103 for obviousness.  Specifically, Crocs argues that: (1) the finding of non-infringement of the ‘789 patent was erroneous because the Commission’s claim construction was unnecessarily focused on particular details, and was used as a checklist approach during the infringement analysis; (2) the ‘789 patent contains dominant features that represent a synergistic interaction between many different design elements that would be immediately apparent to an ordinary observer; (3) a domestic industry exists because an ordinary observer would find substantial similarity between the overall designs of the Crocs shoes and the ‘789 patent; and (4) the ‘858 is valid because the prior art does not teach a passive restraint system, the ‘858 patent yields much more than predictable results, a nexus exists between Crocs’ commercial success and the ‘858 invention, and other evidence of secondary considerations, including copying, is present. According to the Commission’s brief, the issues on appeal are: (1) whether the Commission’s finding that the ‘789 patent is not infringed by the accused products is in accordance with law and supported by substantial evidence; (2) whether the Commission’s finding that no domestic industry exists with respect to the ‘789 patent because of Crocs’ failure to satisfy the technical prong is in accordance with law and supported by substantial evidence; and (3) whether the Commission’s finding that the asserted claims of the ‘858 are invalid under 35 U.S.C. § 103 is in accordance with law and supported by substantial evidence.  Specifically, the Commission argues that: (1) an ordinary observer would not view the overall appearance of the ’789 patent as being substantially similar to the accused products; (2) the Commission’s decision is consistent with the Federal Circuit’s subsequent holding in Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665 (Fed. Cir. (2008)); (3) the ’858 patent is obvious because the invention is a combination of familiar elements, i.e., the combination of an inelastic, non-stretchable strap with the known Aqua Clog to produce a predictable result and a shoe of uniform composition; and (4) the secondary considerations of non-obviousness are far outweighed by the overwhelming prima facie evidence of obviousness. In CLI’s (intervenor) brief, CLI argues that: (1) the ‘789 patent claim construction was correct and did not prejudice Crocs; (2) substantial evidence supports the Commission’s finding of non-infringement; (3) Crocs failed to satisfy the technical prong of the domestic industry requirement regarding the ‘789 patent; and (4) the Commission correctly held the ‘858 patent invalid as obvious because the addition of a foam strap to the Aqua Clog was obvious and no secondary considerations overcome the strong showing of prima facie obviousness. In Gen-X Sports’ (intervenor) brief, Gen-X Sports argues that: (1) the Commission’s claim construction is not grounds for reversal because the trial court has the discretion as to the level of detail to provide and the claim construction was properly based upon the patent drawings and the prior art; (2) the comparison of the ‘789 patent to the respondents’ shoes in the context of the prior art is the proper analysis under Egyptian Goddess; (3) the point of novelty finding was harmless error because it did not impact the finding of non-infringement; and (4) the findings of the ordinary observer test are supported by the substantial evidence. In Double Diamond’s (intervenor) brief, Double Diamond argues that: (1) the Commission did not abuse its discretion by issuing a detailed claim construction and Crocs has not identified any prejudice; (2) the Commission applied the proper legal standard to the substantial evidence to support a finding that none of Double Diamond’s four accused shoe models infringe the ‘789 patent; (3) Crocs’ emphasis on purported “dominant” design features is improper; and (4) substantial evidence supports a finding that none of Double Diamond’s accused models infringe the ‘789 patent. * Mark Tison is a summer associate at Oblon Spivak
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Federal Circuit To Hear Oral Argument In SiRF Technology Appeal On November 4

By Eric Schweibenz
|
Oct
29
On November 4, 2009, the Federal Circuit is scheduled to hear oral argument in SiRF Technology, Inc. v. ITC  (2009-1262). By way of background, Global Locate, Inc. (“GL”) filed a complaint with the ITC against SiRF Technology (“SiRF”) in April 2007, alleging violation of Section 337 by SiRF’s importation and sale of certain Global Positioning System (“GPS”) chips, chipsets, products, and software, which allegedly infringed certain patents owned by GL.  The patents at issue included U.S. Patent No. 6,606,346 (“the ‘346 patent”), U.S. Patent No. 6,704,651 (“the ‘651 patent”), U.S. Patent No. 6,651,000 (“the ‘000 patent”), U.S. Patent No. 6,937,187 (‘the ‘187 patent”), U.S. Patent No. 7,158,080 (‘the 080 patent”), and U.S. Patent No. 6,417,801 (“the ‘801 patent”).  The complaint named SiRF and four of its customers as respondents.  Broadcom Corporation is also a complainant.  The Commission instituted an investigation (Inv. No. 337-TA-602) and an evidentiary hearing was held.  On August 8, 2008, ALJ Carl C. Charneski issued an initial determination concluding that all asserted claims were valid and infringed.  SiRF and the Commission Investigative Staff petitioned for review of several of ALJ Charneski’s rulings, but the ITC determined to review only 3:  (1) whether GL had standing to assert the ‘346 patent, (2) whether SiRF directly infringes the ‘651 patent, and (3) whether SiRF directly infringes the ‘000 patent. On January 15, 2009, the ITC found that GL had standing to assert the ‘346 patent and that SiRF directly infringes both the ‘651 patent and the ‘000 patent.  According to SiRF's briefs, the ITC did not address several issues raised by SiRF, including claim construction issues and whether the intervening In re Bilski decision rendered certain of the claims of two patents, the ‘187 patent and the ‘801 patent not patent-eligible.  The ITC issued a limited exclusion order and cease-and-desist orders, prohibiting the importation and sale of covered GPS devices.  SiRF appealed the ITC decision. According to SiRF’s opening and reply briefs, the issues on appeal involve six patents.  Regarding the ‘346 patent, the issue is whether the investigation should have been terminated as to this patent because of lack of standing due to the failure to join a co-owner of the patent.  Specifically, SiRF argues that the invention was conceived while the inventor worked for another company, and that the other company should be deemed a co-owner of the patent.  Regarding the ‘651 and ‘000 patents, there are several issues.  First, SiRF questions whether the ITC erred in ruling that SiRF infringes the two patents on the ground that SiRF performs all of the steps in the method claims.  SiRF argues that they do not perform all of the steps in the method claims directed to satellite communication because customers and end users perform some of the steps.  Alternatively, they argue that certain of the steps of those same claims are not performed in the U.S.  As a related issue, SiRF questions whether the ITC violated its duty under the Administrative Procedures Act by failing to address SiRF’s argument that all of the steps of claim 1 of the ‘651 patent and the ‘000 patent are not performed in the U.S.  SiRF also questions whether the ITC’s infringement determination as to the ‘651 patent is based on an erroneous claim construction of “satellite ephemeris,” whether the ITC’s infringement determination as to the ‘000 patent is based on an erroneous claim construction of “satellite signals,” and whether the ITC erred in finding that the Zhao patent did not anticipate claims in the ‘000 patent. Regarding the ‘080 patent, SiRF characterizes the issue as whether the ITC’s infringement determination is based on an erroneous claim construction of “long-term satellite tracking data.”  Regarding the ‘801 and ‘187 patents, the issues on appeal include whether the ITC erred in ruling that the asserted method claims recite processes that are patent-eligible under 35 U.S.C. § 101.  SiRF argues that the methods of the ‘801 and ‘187 patents do not meet the “tied to a particular machine or apparatus” or “transforms a particular article into a different state or thing” tests announced in In re Bilski, 545 F.3d 943 (Fed. Cir. 2008).  Finally,  SiRF questions whether the ITC erred in finding that SiRF meets the “dynamic model” and “sequential estimator” limitations of the ‘187 patent claims. According to the Commission’s Brief in support of the ITC’s final determination, the issues on appeal also involve the same six patents.  Regarding the ‘346 patent, the Commission sees the issue as whether it properly rejected SiRF’s challenge to GL’s standing to assert the patent.  Regarding the ‘651 and ‘000 patents, the Commission sees the issues as (1) whether it correctly construed “satellite ephemeris” in the ‘651 patent, consistent with the definition in the patent, (2) whether it  correctly construed  “satellite signals” in the ‘000 patent, consistent with a preferred embodiment, (3) whether it  correctly found that SiRF directly infringes the two patents because SiRF controls performance of all of the claimed steps in the U.S., and (4) whether substantial evidence supports its finding that the Zhao patent did not anticipate the asserted claims of the ‘000 patent.  Regarding the ‘080 patent, the Commission characterizes the issue as whether the term “long-term satellite tracking data” merely requires that the “satellite tracking data,” as a whole, be “long term.”  Regarding the ‘801 and ‘187 patents, the Commission sees the issues on appeal as whether the process claims in the ‘801 and ‘187 patents are tied to a particular machine, such as a GPS receiver, and whether substantial evidence supported the Commission’s finding that certain SiRF products infringe asserted claims of the ‘187 patent. In Broadcom and GL’s (collectively “GL”) Intervenor Brief, GL argues (1) that the Commission’s determination of the ownership of the ‘346 patent was correct, (2) that the Commission properly rejected SiRF’s claim of no liability due to either divided infringement, or performance of some steps outside the U.S., (3) that the Commission properly construed “satellite ephemeris” in the ‘651 patent and “satellite signals” in the ‘000 patent, (4) that the Commission correctly found that the Zhao reference did not anticipate the asserted claims of the ‘000 patent, (5) that the Commission properly construed “long-term satellite tracking data” in the ‘080 patent, (6) that the ‘’801 and ‘187 patents claim patentable subject matter, and (7) that the Commission properly found that SiRF infringes the ‘187 patent.
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Federal Circuit To Hear Oral Argument In Ajinomoto Appeal On December 10

By Eric Schweibenz
|
Nov
20
On December 10, 2009, the Federal Circuit is scheduled to hear oral argument in Ajinomoto Co., Inc. v. ITC (2009-1081). By way of background, on April 25, 2006, Ajinomoto Heartland LLC filed a complaint with the ITC alleging that Global Bio-Chem Technology Group Co., Ltd.; Changchun Dacheng Bio-Chem Engineering Development Co., Ltd.; Changchun Baocheng Bio Development Co., Ltd.; Changchun Dahe Bio Technology Development Co., Ltd.; and Bio-Chem Technology (HK) Ltd. (collectively, “GBT”) were violating Section 337 by importing lysine made by methods that infringed two patents:  U.S. Patent No. 5,827,698 (the ‘698 patent) and U.S. Patent No. 6,040,160 (the ‘160 patent).  The Commission initiated an investigation on May 24, 2006 styled as Certain L-Lysine Feed Products, Their Methods of Production and Genetic Constructs for Production (337-TA-571).  Ajinomoto Heartland LLC’s parent company, Ajinomoto Co., Inc., was later added as a complainant.  On March 11-14, 2008, ALJ Bullock held an evidentiary hearing, and on July 31, 2008 issued an Initial Determination (“ID”) in the investigation, finding no violation of Section 337, due to the invalidity of the asserted claims.  On September 29, 2008, the Commission reviewed and took no position on ALJ Bullock’s findings that the relevant claim of the ‘160 patent was invalid for failure to comply with the best mode requirement of 35 U.S.C. §112 “to the extent that finding was based on fictitious data” and that the ‘160 patent was unenforceable for inequitable conduct.  It declined to review the remainder of the ID.  Thus, the Commission terminated the investigation, and adopted the ID as its Final Determination, finding no violation of Section 337.  On November 24, 2008, Complainants Ajinomoto Co., Inc., and Ajinomoto Heartland LLC (collectively, “Ajinomoto”) appealed the decision of the ITC to the Federal Circuit. According to Ajinomoto’s Opening and Reply briefs to the Federal Circuit, the Commission erred in its application of the best mode requirement with respect to both the ‘698 patent and the ‘160 patent.  The issues, as presented by Ajinomoto, are (1) whether the ITC erred in finding best mode violations for failure to disclose features of the ‘698 patent which were not included in the claims; (2) whether the ITC erred in finding the ‘698 patent invalid for failure to disclose sucrose as nourishment for Escherichia coli (“E. coli”), which was both a production detail and known in the art; (3) whether the ITC erred in finding the ‘698 patent invalid for failure to disclose the details of an unclaimed experiment that yielded a host bacterial strain that did not contain the patented mutation, and was disclosed in the patent and put on public deposit; (4) whether the ITC erred in finding the ‘698 patent invalid for disclosing purportedly “fictitious” experimental data where there was no finding as to what the best mode was, whether it was disclosed or not, or how the data related to that unnamed mode; and (5) whether the ITC erred in invalidating the ‘160 patent entirely, rather than merely holding that the Japanese filing date was not available for priority purposes. Ajinomoto argues that the Patent Act requires that best mode be set forth with regard to the invention itself, and not with regard to unclaimed subject matter.  According to Ajinomoto, feeding E. coli sucrose to increase lysine production is outside the scope of the ‘698 patent’s claims, and therefore is not subject to the disclosure requirements of §112.  Furthermore, Ajinomoto asserts, sucrose as a food source for E. coli was well known in the art at the time of filing and was merely a production detail; consequently, it need not be included in the disclosure to satisfy the best mode requirement.  Ajinomoto also argues that the ‘698 patent does not claim protection for the results of an experiment yielding a host strain, and thus need not be disclosed as a best mode.  Furthermore, Ajinomoto maintains that, even if it were claimed, this host-strain was placed on public deposit and the deposit was disclosed in the patent, necessarily satisfying the best mode requirement.  Discussing the “fictitious” data, Ajinomoto states that this data is not claimed in the patent, and therefore also requires no best mode disclosure.  Ajinomoto additionally questions the applicability of a best mode analysis to this data as, in their view, the data does not relate to a best mode of any matter. With regard to the ‘160 patent, the ITC determined that the Japanese application, from which the ‘160 claims priority, failed to disclose a particular laboratory host strain, which was a best mode of the priority invention.  Ajinomoto asserts that this host strain was not claimed in the ‘160 patent and that the inventors discarded the host strain within months of filing the priority application.  Ajinomoto also maintains that even if the priority application did not disclose the best mode, this does not render the ‘160 patent invalid; it merely disables the ‘160 patent from claiming priority based on that application. According to the Commission’s Brief in support of the ITC’s final determination, the issues are (1) whether the Commission properly found that the relevant claim of the ‘698 patent was invalid for violating the best mode requirement; (2) whether the Commission properly found that the ‘698 patent was unenforceable for inequitable conduct before the USPTO; and (3) whether the Commission properly found that the relevant claim of the ‘160 patent was invalid for violating the best mode requirement. In contrast to Ajinomoto, the Commission argues that the ‘698 patent is invalid for violating the best mode requirement because the best mode requirement applies both to the invention and to all subject matter that materially affects the properties of the invention.  Accordingly, the Commission asserts that using sucrose as a food source materially affects the properties of the claimed invention and should have been disclosed as a best  mode.  The Commission also notes that, as of the filing date, the inventors had a subjective preference for sucrose and the use of sucrose was not a mere production detail.  The Commission states that Ajinomoto also violated the best mode requirement by failing to disclose the insertion of variant lysC genes and sucrose utilization genes into the preferred bacterial strain, and a person of ordinary skill in the art would be unable to practice the best mode without such a disclosure.  According to the Commission, depositing this preferred strain did not cure the failure of the specification, because the strain deposited was not the strain identified as being deposited in the specification.  Additionally, the Commission asserts that the “fictitious data” included in the ‘698 patent represents a derivative strain which was never used experimentally.  In the Commission’s view, this data was disclosed in an effort to conceal the best mode of practicing the patent’s claims. With regard to inequitable conduct, the Commission argues, in light of the previous violations, that Ajinomoto engaged in a pattern of non-disclosure and made a series of misrepresentations in procuring the ‘698 patent. In connection with the ‘160 patent, the Commission asserts that Ajinomoto did not disclose the best host strain for practicing the relevant claim of the ‘160 priority application.  The Commission argues that an application to which a patent claims priority must contain the complete disclosure.  Furthermore, the Commission asserts that Ajinomoto may not alternatively claim priority from the later-filed PCT application because an intention to change the priority date was not set forth in the pre-hearing brief, as ALJ Bullock required. In its Intervenor Brief, GBT argues, as does the Commission, that the best mode disclosure applies to all claim elements, not simply to those elements that are novel. Additionally, GBT asserts that, based on the claim language of the ‘698 patent, Ajinomoto was required to disclose its best carbon source, sucrose.  GBT also maintains that the use of sucrose as a carbon source is not a mere production detail and the use of sucrose and sucrose utilization genes was not known to the person of ordinary skill in the art.  GBT further concludes that the language of the ‘698 patent requires a disclosure of Ajinomoto’s best “microorganism,” the bacterial strain including the variant lysC genes and sucrose utilizations genes, for carrying out the claimed invention.  Moreover, GBT argues that Ajinomoto’s deposited strain was not used for carrying out the relevant claim of the ‘698 patent, and that the strain was misdescribed in the specification; thus, public deposit did not satisfy the requirements of §112.  GBT additionally maintains that the “fictitious” data included in the ‘698 patent represented a failure to disclose the best mode of the invention. GBT argues that the Commission’s finding of inequitable conduct should be affirmed, regardless of the Court’s decision concerning best mode. With regard to the ‘160 patent, GBT asserts that Ajinomoto failed to disclose their best “bacterium” for carrying out the invention.  GBT also argues, in concert with the Commission, that Ajinomoto waived its ability to alter the priority date for the ‘160 patent by asserting this position for the first time post-trial.
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Federal Circuit To Hear Oral Argument In Tillotson Appeal On December 10

By Eric Schweibenz
|
Nov
25
On December 10, 2009, the Federal Circuit is scheduled to hear oral argument in Tillotson Corporation v. ITC (2009-1196).  Tillotson filed a complaint with the ITC against thirty-one respondents on May 30, 2007, and another complaint against seven additional respondents on July 19, 2007.  Both complaints alleged violation of Section 337 in the importation and sale of nitrile gloves that allegedly infringed U.S. Reissue Patent No. 35,616 (the ‘616 patent).  Among the many respondents were intervenors Smart Glove Holdings, SDN.BHD., Smart Glove Corporation, Henry Schein, Inc., and HSI Gloves, Inc. (the “Smart Glove/Henry Schein Intervenors”).  The Commission instituted a first investigation (337-TA-608) on July 6, 2007 and a second investigation (337-TA-612) on August 22, 2007.  The two investigations were consolidated on September 19, 2007. The patent at issue is a reissue patent.  All of the claims depend from claim 1.  Claim 1, as originally issued, was directed to “a glove” having certain characteristics, including “having elastic properties such that when stretched from the initial configuration to fit about the hand, the elastomeric material conforms to the configuration of the hand, initially exerting a predetermined pressure on the hand…”  In reissue, claim 1 was amended.  For convenience, elements below added to the claim in reissue are indicated by underlining, with deleted elements indicated by striking through the words.  As amended, claim 1 is directed to “a closely fitting glove . . . having a thickness and elastic properties such that the glove is capable of being stretched to fit closely about the hand and when stretched from the initial configuration to fit closely about the hand, the elastomeric material conforms to the configuration of the hand, initially exerting an initial a predetermined pressure on the hand…” A claim construction hearing was held on December 13, 2007.  Of particular interest was the change of the term “predetermined pressure” to “initial pressure.”  The ALJ issued an order on March 14, 2008, construing the terms in dispute.  The ALJ determined that “predetermined pressure” meant “the amount of pressure decided in advance that will be exerted on the hand of the glove after the glove is donned.” After denying all motions for summary determination, the ALJ held an evidentiary hearing from May 19 to May 27, 2008.  On August 25, 2008, the ALJ issued an initial determination concluding that certain of the claims of the ‘616 patent were infringed.  The ALJ rejected respondents’ arguments that the claims were invalid for anticipation, obviousness, failure to disclose the best mode, lack of enablement, and indefiniteness.  The ALJ also rejected respondents’ arguments that the claims were unenforceable due to inequitable conduct.  The ALJ found the claims invalid, however, under 35 U.S.C. § 251 as having been impermissibly broadened during reissue, and due to a defective reissue declaration. Tillotson filed its petition for review on September 8, 2008.  The Commission reviewed the construction of the term “predetermined pressure,” invalidity under 35 U.S.C. § 251, invalidity due to a defective reissue declaration, no invalidity due to failure to disclose the best mode, and no invalidity due to lack of enablement.  The Commission affirmed the ALJ’s findings on December 22, 2008. According to Tillotson’s opening brief, the first issue on appeal is whether the Commission incorrectly defined the term “predetermined” in the product claim to require a mental step in contradiction to the intrinsic evidence.  Further, Tillotson asserts that the Commission further erred in finding the ‘616 claims broadened during reissue, absent any evidence that any product or structure would not infringe the claims before the reissue amendments but would infringe them after the reissue amendments.  A related second issue, according to Tillotson, is whether the ITC erred in holding the reissue declarations defective. In its brief, Tillotson alleges that the Commission’s definition of “predetermined pressure” is legally improper because it conflicts with the intrinsic record.  According to Tillotson, the ITC-determined definition -- “the amount of pressure decided in advance that will be exerted on the hand of the glove after the glove is donned”-- is inconsistent with the ‘616 patent’s specification because the specification does not require that the first pressure be known before the glove is donned.  Further, Tillotson asserts that the requirement that pressure be decided in advance was alleged to be an improper “cognitive step” for a product claim.  Instead, Tillotson argues that the specification only requires that the first pressure be known in advance of a later pressure measurement, and requires no mental step.  With this interpretation, changing the term “predetermined pressure” to “initial pressure” does not change the scope of the claim.  Accordingly, there was no impermissible broadening of the claim during reissue.  Tillotson also asserts that its reissue declarations were, in fact, proper, as the substitution of terms was well-explained in the declarations. The Commission, in its brief, asserts that the construction of the term “predeterrmined” by the ALJ was proper.  Further, the Commission argues that the patentees did improperly broaden the claims of the ‘616 patent during reissue because a glove that exerts an initial pressure would not meet the “predetermined pressure” limitation in the original claims if the initial pressure was not, in fact, predetermined.  Thus, the reissued claim is broader in scope.  The Commission further asserts that the amendment during the reissue was not sufficiently explained in the reissue declarations. The Smart Glove/Henry Schein Intervenors, in their brief, assert that the ITC properly defined the term “predetermined pressure.”  They further assert that the ITC correctly found that the claims of the ‘616 patent were improperly broadened in the reissue, and that the ITC correctly found the reissue declarations improper.  In addition, they assert that the ITC erred in finding that the ‘616 patent was not invalid due to Tillotson’s failure to disclose the best mode for practicing its invention. In its reply brief, Tillotson emphasizes that the claim as a whole was not broadened by the reissue application, even if the Commission’s claim construction is correct.  It asserts that there is no evidence that any glove would infringe the reissue claims that would not also infringe the original claims.  In addition, Tillotson argues that the ALJ’s rejection of the respondent’s best mode defense was correct, and further that the intervenors’ best mode argument is an improper issue for appeal because the Commission did not rely on the ALJ’s rejection of the best mode defense.
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Federal Circuit To Hear Oral Argument In Vizio Appeal on December 10

By Eric Schweibenz
|
Nov
27
On December 10, 2009, the Federal Circuit is scheduled to hear oral argument in Vizio, Inc. v. ITC, (2009-1386). On October 15, 2007, Funai Electric Co., Ltd. and Funai Corporation (collectively, “Funai”) filed a complaint alleging violations of Section 337 in the importation into the United States, the sale for importation, or the sale within the United States after importation of certain digital televisions by reason of infringement of U.S. Patent Nos. 6,115,074 (the “‘074 patent”) and 5,329,369 (the ‘‘369 patent”).  The complaint named Vizio, Inc.; AmTran Technology Co., Ltd.; TPV Technology Ltd.; TPV International (USA), Inc.; Top Victory Electronics (Taiwan) Co., Ltd.; and Envision Peripherals, Inc. (collectively, “Appellants”) as respondents.  On November 15, 2007, the Commission instituted an investigation (Inv. No. 337-TA-617).  ALJ Carl C. Charneski held an evidentiary hearing in August 2008 and issued an Initial Determination (“ID”) on November 17, 2008.  In his ID, ALJ Charneski found a violation of Section 337 with respect to the ‘074 patent and concluded that the asserted claims of the ‘074 patent were valid and infringed by both Appellants’ legacy and work around products.  ALJ Charneski found no violation with respect to the ‘369 patent. On February 11, 2009, the Commission determined to review the ID in part, specifically whether (1) Appellants directly infringe claim 23 of the ‘074 patent through certain testing activities in the United States; and (2) Appellants induced infringement of claim 23 of the ‘074 patent.  On April 10, 2009, the Commission issued a Final Determination overturning ALJ Charneski’s finding of direct infringement by testing as to some respondents, but otherwise affirming ALJ Charneski’s findings of infringement and validity.  The Commission also accepted ALJ Charneski’s recommendations concerning remedy, which included the issuance of a limited exclusion order and cease-and-desist orders. According to the Appellants’ opening and reply briefs, Appellants raise four issues on appeal.  First, Appellants assert that ALJ Charneski improperly construed the term “identifying channel map information . . . and assembling said identified information” as encompassing use of Program Map Table (“PMT”).  In particular, Appellants assert that the use of PMT was disclaimed during the prosecution of the ‘074 patent to overcome the examiner’s anticipation rejection.  If construed as not to encompass the use of PMT, then the accused product would not be found to infringe the ‘074 patent.   Second, Appellants assert that ALJ Charneski improperly relied on “inapposite evidence dealing with suitability for transmission, not suitability for identification” thus reading the “identifying” limitation out of the claims.  Third, Appellants assert that ALJ Charneski improperly focused on extrinsic evidence and expert testimony rather than the claim language and written description thereby erroneously construing “channel map information” to require four types of data which appeared as exemplars in the specification.  Fourth, Appellants assert that if “channel map information” were to be construed not to require the four types of data, then the claims are invalid as anticipated by the A/55 standard.  Further, even if ALJ Charneski’s construction of “channel map information” were correct, the claims are invalid under Section 103 in view of the combination of the A/55 standard and U.S. Patent No. 5,982,411. With respect to Appellants’ first argument, the Commission asserted in its brief that the asserted claims do not preclude use of the PMT.  In particular, the Commission asserts that the claims include only step/functions of “identifying” and “assembling” the PMT, and no step/function for using the PMT.  Further, in response to the Appellants’ disavowal argument, the Commission asserts that the statements made during prosecution, and relied on by Appellants, only discuss one advantage of the invention (i.e., the PMT being “NOT needed”) and “did not in any way state that the PMT is unallowable.”  Regarding the Appellants’ second issue, the Commission asserts that Appellants improperly divorced the term “suitable for use” from surrounding claim language and that there is ample evidence to support ALJ Charneski’s construction that content, rather than the format of the channel map, determines suitability for use.  In response to Appellants’ third argument, the Commission asserts that ALJ Charneski’s construction involved “a detailed examination of the claim language, the specification, the prosecution history including the MPEG standard and expert testimony regarding the perspective of one of ordinary skill in the art.”  Finally, in response to the Appellants’ invalidity arguments, the Commission asserts that ALJ Charneski correctly observed that the A/55 Standard’s “channel number,” which is a 10-bit field, does not anticipate the MPEG program number, which is a 16-bit field.  In addition, with respect to the obviousness arguments, the Commission asserts that ALJ Charneski correctly determined that “even if all the elements were known in the prior art, it would not have necessarily been obvious to combine them.” In Funai’s Intervenor brief, Funai asserts that (1) the claims of the ‘074 patent “say nothing about use or receipt of the PMT,”  nor can any support be found in the specification or prosecution history for Appellants’ disavowal argument; (2) the ALJ correctly found that the “question of usability, or suitability, related to the ‘channel map’ and its content”; (3) the Commission correctly found that the channel map information includes all of the MPEG compatible program information needed to constitute a program, “including the program number, elementary PIDs, stream types, and PCR_PID replicated from the MPEG Program Map Table”; and (4) Appellants failed to show (i) “that the A/55 Standard meets each of the limitations required by the claims” of the ‘074 patent to be an anticipatory reference, and (ii) “where every element of the claims appears in the prior art” for purposes of demonstrating obviousness under Section 103.
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Federal Circuit Affirms ITC’s Final Determination In Tillotson Appeal

By Eric Schweibenz
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Dec
16
On December 14, 2009, a Federal Circuit panel consisting of Judges Bryson, Archer, and Moore issued a per curiam judgment, pursuant to Federal Circuit Rule 36, affirming the ITC’s final determination in Tillotson Corporation v. ITC (2009-1196). As explained in our November 25 post, the underlying investigations in connection with this appeal were Certain Nitrile Gloves (Investigation Nos. 337-TA-608/612) and the Commission’s final determination was that there was no violation of Section 337.
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Federal Circuit Hears Oral Argument In Deere & Company Appeal

By Eric Schweibenz
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Jan
04
The Federal Circuit was scheduled to hear oral argument today in Deere & Company v. ITC, (2009-1016). On January 8, 2003, Deere & Company (“Deere”) filed a complaint alleging violations of Section 337 in the importation into the United States, sale for importation, and sale within the United States after importation of certain agricultural vehicles and components thereof by reason of infringement and dilution of U.S. Registered Trademarks Nos. 1,254,339, 1,502,103, 1,503,576, and 91,860.  The complaint named, among others, Bourdeau Brothers, Inc., OK Enterprises, and Sunova Implement Co., (collectively, “Bourdeau”) as Respondents.  On February 13, 2003, the Commission instituted an investigation (Inv. No. 337-TA-487).  On January 13, 2004, Chief ALJ Paul J. Luckern issued his Initial Determination (“ID”) finding violation of Section 337.  On May 14, 2004, the Commission issued a Final Determination adopting ALJ Luckern’s ID together with a general exclusion order, two limited exclusion orders, and cease-and-desist orders. On appeal by Bourdeau, the Federal Circuit affirmed various aspects of the Commission’s Final Determination.  However, the Federal Circuit found error with the Final Determination, in particular finding that ALJ Luckern erred in placing the burden of proving authorization on Bourdeau rather than on Deere in violation of its opinion in SKF USA, Inc. v. ITC, 423 F.3d 1307 (Fed. Cir. 2005).  Thus, on March 30, 2006, the Federal Circuit vacated the Commission’s Final Determination as it related to European version self-propelled forage harvesters (“EVSPFHs”) and remanded the investigation for further proceedings at the ITC. On June 20, 2006, the Commission referred the investigation to ALJ Luckern for further proceedings consistent with the Federal Circuit’s decision.  On August 18, 2006, ALJ Luckern issued Order No. 55 denying the parties’ cross motions for summary judgment and held an evidentiary hearing in November 2006.  ALJ Luckern issued his Initial Determination on remand on December 20, 2006 (“Remand ID”).  In his Remand ID, ALJ Luckern found that a violation of Section 337 occurred, determining that Deere had established that it did not authorize the sale of EVSPFHs in the United States, and that “all or substantially all” of Deere’s self-propelled forage harvesters (“SPFH”) sales in the United States were North American version self-propelled forage harvesters (“NAVSPFH”).  After requesting additional comments and briefing, the Commission issued, on August 12, 2008, its final opinion and order reversing ALJ Luckern’s determination of violation of Section 337. According to Deere’s opening and reply briefs, Deere raises four issues on appeal.  First, Deere asserts that the Commission erred in determining whether “all or substantially all of Deere’s sales in the United States were of North American forage harvesters” as set forth in Bourdeau Bros. v. ITC, 444 F.3d 1317 (Fed. Cir. 2006).  In particular, Deere asserts that the Commission improperly “compared the number of 'authorized' EVSPFH sales by official Deere dealers to the total number of EVSPFHs known to be in the United States” rather than to the total number of SPFH sales in the United States (i.e., the number of NAVSPFH sales combined with “authorized” EVSPFH sales).  Second, Deere asserts that the Commission erred “in determining that sales by Deere’s official European dealers were relevant to the ‘all or substantially all’ test and that Deere had ‘authorized’ these dealers’ sales of EVSPFHs.”  In support of this assertion, Deere argues that (i) the relevance of such sales had not been in dispute prior to the Commission’s request on remand for further briefing on the issue; (ii) on remand Bourdeau and ALJ Luckern did not include such sales in the “all or substantially all” analysis; (iii) inclusion of such sales is “inconsistent with the territorial nature of U.S. trademarks and the language and purpose of Section 337”; and (iv) record evidence demonstrates that Deere was unaware of and could not have prevented such sales.  Third, Deere asserts that “even if the sales of European dealers are relevant, the ITC erred as a matter of law in not giving Deere an opportunity to demonstrate that it did not authorize the sale of EVSPFHs by its official European dealers.”  Fourth, Deere asserts that the Commission erred in its analysis of whether Deere’s official U.S. dealers were authorized to sell EVSPFHs.  In support of this assertion, Deere argues that the Commission’s findings with respect to the theory of “apparent authority” were legally erroneous and not supported by substantial evidence. In its brief, the Commission asserts that substantial evidence supports the Commission’s factual findings that Deere failed to (1) meet its burden under the “all or substantially all” test and (2) prove that its official dealers were not authorized to sell subject EVSPFHs.  In support of the assertion that Deere failed to meet its burden under the “all or substantially all” test, the Commission argued that it was impossible to complete the test because “Deere failed to put on any evidence of its authorized European dealer sales to purchasers in the United States” as required for the analysis.  Further, the Commission argued that even with all the available data, the record did not support a finding that “all or substantially all” of Deere’s sales in SPFHs in the United States were NAVSPFHs, because the available data demonstrated that “authorized Deere dealer sales accounted for approximately half of the non-conforming sales of EVSPFHs in the United States.”  Next, with respect to the assertion that Deere failed to prove its official dealers were not authorized to sell subject EVSPFHs, the Commission argued that the Commission’s finding in this regard was reasonable based on the following factors: (i) the volume of non-conforming sales by official Deere dealers; (ii) Deere’s knowledge of sales by official dealers and failure to act to curb such sales; (iii) Deere’s provision of warranty services to EVSPFHs present in the United States; (iv) the lack of a stated policy discouraging or forbidding the practice of gray market importations by Deere’s official dealers; (v) the Machinefinder.com website maintained and operated by Deere; and (vi) Deere’s involvement in the financing of EVSPFHs by official dealers through JD Credit. In Bourdeau’s Intervenor brief, Bourdeau asserted that Deere failed to (i) satisfy the “all or substantially all” standard by a preponderance of the evidence, because Deere failed to sufficiently “establish the total number of European harvesters sold by official Deere dealers, and the total number of harvesters sold by official Deere dealers”; (ii) establish a diminution of the value of its trademarks; (iii) rebut the presumption of authorization given the lack of “testimony or documentary proof that Deere prohibited, or even tried to prohibit its authorized European Deere Dealers from selling or offering for sale for importation to the U.S., [EVSPFHs]”; and (iv) rebut the presumption that sales of EVSPFHs by official European Deere dealers were authorized by submitting insufficient proof on this issue and having actively supported the conduct of its dealers.
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Federal Circuit Reverses and Remands in Crocs Appeal (2008-1596)

By Eric Schweibenz
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Feb
24
On February 24, 2010, the Federal Circuit issued its opinion in Crocs, Inc. v. Int’l Trade Comm’n, No. 2008-1596.  This was an appeal from the ITC’s final determination in Certain Foam Footwear (Inv. No. 337-TA-567) that U.S. Patent No. 6,993,858 (the ‘858 patent) was obvious, that U.S. Patent No. D517,789 (the ‘789 patent) was not infringed by intervenors, and that Complainant Crocs, Inc. (“Crocs”) had not satisfied the technical prong of the domestic industry requirement for the ‘789 patent. By way of background, Crocs filed a complaint and an amended complaint with the ITC on March 31, 2006 and April 27, 2006, respectively, naming eleven respondents that allegedly violated Section 337 by importing and selling certain foam footwear.  After the ITC instituted an investigation and held an evidentiary hearing, ALJ Charles E. Bullock issued an initial determination (“ID”) on April 11, 2008, in which he concluded that (i) there was no violation because the design of the ‘789 patent was not infringed by respondents’ shoes, (ii) Crocs’ shoes did not satisfy the technical prong of the domestic industry requirement in connection with the ‘789 patent, and (iii) the ‘858 patent was obvious.  Crocs, Respondents Collective Licensing International, LLC, Effervescent Inc., Holey Soles Holding Ltd., and the Commission Investigative Staff filed petitions for review of the ID.  Respondents Gen-X Sports, Inc. and Double Diamond Distribution Ltd. subsequently filed joinders to the petition.  The Commission granted the petitions in part and upheld the ID on July 25, 2008 with modifications and clarifications set forth in a separately issued opinion.  Crocs appealed the ITC’s final determination to the Federal Circuit. The Federal Circuit reversed the ITC’s finding that the ‘858 patent was obvious on the grounds that the ITC erred in finding that the prior art taught all of the claimed elements of the ‘858 patent and incorrectly weighed the secondary considerations evidence.  The Federal Circuit also reversed the ITC’s findings on the ‘789 patent on the grounds that the Commission erred in claim construction, in applying the ordinary observer test for infringement, and in applying the technical prong of the domestic industry requirement. Noting lower courts’ often misplaced reliance on detailed verbal descriptions in design patent infringement cases, the Federal Circuit found that the verbal claim construction provided by ALJ Bullock erroneously focused on particular features of the ‘789 patent design and led the ITC away from proper consideration of the design as a whole.  Specifically, the Federal Circuit found that two details required by the written claim construction – uniform strap width and uniform hole spacing – were contrary to the claimed invention. According to the decision, the claim construction error in turn distorted the infringement analysis under the ordinary observer test.  In particular, the Federal Circuit found that the ITC placed undue emphasis on the details of its written description of the patented design, which “became a mistaken checklist for infringement.”  The proper analysis instead required a side-by-side comparison of the drawings of the patented design and the accused products, which, according to the Federal Circuit, showed that the shoes appeared nearly identical to an ordinary observer familiar with the prior art designs.  The Federal Circuit held that the accused products embodied the overall effect of the patented design in sufficient detail to cause market confusion, and thus infringed the ‘789 patent. The Federal Circuit went on to find that because the test for the technical prong of the domestic industry requirement is essentially the same as for infringement, the ordinary observer test should be used to compare Crocs’ own shoe products to the ‘789 patent design.  Noting again that the test applies best in a side-by-side comparison, the Federal Circuit found that an ordinary observer familiar with the prior art designs would consider the Crocs shoes the same as the patented design.  Thus, the Federal Circuit determined that the technical prong of the domestic industry requirement was satisfied. Regarding obviousness, the Federal Circuit found that the record showed that the prior art actually taught away from the use of foam straps as claimed in the ‘858 patent because foam was likely to stretch and deform, and cause the wearer discomfort.  According to the Federal Circuit, the record also showed that, contrary to the ITC’s final determination, choosing foam as the material for a strap for a shoe that is otherwise made of foam is not a logical modification because foam was known to be an unsuitable material that was prone to tearing.  The new combination was therefore not found to have been obvious.  Moreover, the Federal Circuit found that even if the ‘858 patent claimed a combination of known elements, it yielded more than predictable results because the “passive restraint system” employed by the patent (whereby frictional forces that develop between the foam components keep the strap in place so that it can maintain the shoe in the correct position without constant contact with the Achilles part of the foot) facilitates a loose anatomical fit that makes the claimed invention more comfortable than prior art products.  Finally, with respect to secondary considerations of non-obviousness, the Federal Circuit found that (1) Crocs established a prima facie case of nexus between its shoes that practice the ‘858 patent and the commercial success they enjoy, and that the record contained little or no rebuttal evidence; (2) the ITC’s finding of substantial industry praise for the claimed invention and the products covered by it deserved even more credit than commercial success; and (3) the ITC’s finding of copying tips the scale still farther in the direction of non-obviousness. Accordingly, the Federal Circuit reversed the ITC’s final determination that the ‘789 patent was not infringed, that Crocs did not satisfy the technical prong of the domestic industry requirement of Section 337 relating to the ‘789 patent, and that the ‘858 patent would have been obvious.  Further, the Federal Circuit remanded the investigation to the ITC for a determination of infringement of the ‘858 patent and any appropriate remedies.
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Federal Circuit to Hear En Banc Arguments in Princo Appeal (2007-1386)

By Eric Schweibenz
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Feb
26
The Federal Circuit will conduct an en banc hearing on March 3, 2010 in Princo Corp. v. Int’l Trade Comm’n, (2007-1386).  As detailed in our April 21, 2009 post, in the original decision, the panel remanded the case back to the International Trade Commission to consider one of Princo’s patent misuse defenses. By way of background, Sony and Philips jointly developed the standard for CD-R and CD-RW discs which they called the “Orange Book” standard.  The Court held that U.S. Patent Nos. 4,999,825 and 5,023,856 (the “Raaymakers patents”), claiming an analog method of encoding discs, undeniably relate to the Orange Book.  Another patent, Sony’s U.S. Patent No. 4,942,565 (the “Lagadec patent”) claims a digital method of encoding, which is incompatible with the analog standard.  One of the claims in the Lagadec patent, however, is arguably broad enough to fall within the Orange Book.  Philips, the party responsible for licensing the patents, pooled all three patents together.  Princo took a license, but when it stopped paying royalties, Philips initiated an action before the ITC. As a defense to the infringement claim, Princo made two patent misuse arguments before the ITC.  First, Princo argued that the package license was an illegal tying arrangement, because it required licensing the Lagadec patent which was not necessary for the Orange Book Standard.  Second, Princo argued that Sony and Philips had entered into an agreement to not license the Lagadec patent separately from the patents in the pool.  The Federal Circuit panel rejected Princo’s first misuse argument but remanded to the Commission for further analysis of the second allegation.  Specifically, the panel ordered the Commission to determine whether there was, in fact, such an agreement and whether Lagadec was a potentially viable alternative to the Orange Book standard. In response to the panel opinion, the Commission, plaintiff U.S. Philips Corporation and Princo all filed petitions for rehearing en banc.  The Federal Circuit denied Princo’s petition but granted the ITC’s and Philips’ petitions.  The Court asked for briefing from the parties addressing the second misuse theory. The ITC argues that the Federal Circuit erroneously ordered a remand on an issue that was never before the Commission.  According to the ITC, no party raised the issue of whether Sony and Philips had entered into an agreement not to license the Lagedec patent as competitive technology to the Orange Book. In its brief, Philips agrees with the ITC that it is not proper to remand to the ITC for findings on the existence of an agreement when Princo, who had the burden of proving the existence of an agreement, never sought those findings before the Commission.  Furthermore, Princo never proved existence of an agreement nor identified a market that such an agreement might have harmed.  According to Philips, both of these factors are essential to proving a patent misuse case. Philips also asserts that, even if the issue had been raised and an agreement existed, it could not be the basis of a patent misuse defense without an unprecedented and unwarranted expansion of misuse law.  According to Philips, since the Lagadec patent stemmed from a joint effort by Sony and Philips to develop CD-R/RW technology, any agreement not to license separately is a reasonable ancillary restraint that has the pro-competitive effect of encouraging joint ventures.  Because such an agreement is facially reasonable, the proper standard by which to analyze any alleged agreement is under a rule of reason, rather than the lower per se standard.  Under the rule of reason standard, Princo failed to prove patent misuse.  Princo did not present proof of a relevant market, did not prove actual or likely competitive harm, and did not prove that the Lagadec patent would be used to enter a relevant market to compete with the Orange Book. Philips further asserts, even if the agreement existed and was anticompetitive, it could not be used as the basis for a misuse defense.  According to Philips, the misuse defense applies only where the patentee conditions a license on terms that improperly expand the patent grant.  For the ITC to find misuse -- where Philips never tried to impose license conditions going beyond the terms of the patents in the Orange Book -- would be an “unprecedented and unwise expansion of the misuse defense.” Princo, on the other hand, asserts in its brief that it (and the Commission Investigative Staff ) did argue to the Commission that Philips and Sony had an agreement to suppress competition.  According to Princo, it asserted at the ITC that Philips decided to combine with its competitors and create a patent pool and this created a horizontal restraint of trade.  Princo also points to arguments it made about how the cost of patent licenses went down when the Taiwan Fair Trade Commission ordered the pool licensors to license the patents individually.  Princo also points to arguments it made that when Philips and Sony tied essential and non-essential patents in the pool, they ensured there would be no competing standard.  According to Princo, there is sufficient argument and evidence on the record to support its patent misuse allegation. Princo also asserts that the Commission did, in fact, address Princo’s horizontal competition-suppression theory in its final determination.  As to the waiver arguments made by the ITC and Philips, Princo asserts that it raised the issues in its opening brief on appeal and that the ITC and Philips both addressed the merits of its argument substantively, without asserting that these issues had been waived.  In other words, Princo asserts that the waiver argument has been waived. Oral argument in this case is scheduled for March 3 at 2:00 p.m.
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Federal Circuit Affirms in Ajinomoto Appeal (2009-1081)

By Eric Schweibenz
|
Mar
08
Further to our November 20, 2009 post, on March 8, 2010, the Federal Circuit issued its decision in Ajinomoto Co., Inc. v. Int’l Trade Comm’n, No, 2009-1081.  In the decision, the Federal Circuit affirmed the ITC’s final determination in Certain Feed Products (Inv. No. 337-TA-571) that (1) U.S. Patent Nos. 5,827,698 (the ’698 patent) and 6,040,160 (the ‘160 patent) are invalid for violating the best mode requirement of 35 U.S.C. § 112, first paragraph, and (2) the ‘698 patent is unenforceable due to inequitable conduct. By way of background, the ‘698 and ‘160 patents relate to processes for manufacturing lysine.  Lysine is an essential amino acid that livestock must obtain from their food sources.  Since naturally occurring lysine may be inadequate, feed manufacturers and farmers regularly add lysine as a dietary supplement to grass feed for livestock.   The industry uses microorganisms such as Eschericia coli (E. coli) to synthesize lysine from a carbon source.  The methods that are the subject of the ‘698 and ‘160 patents improve the processes through which  genetically engineered E. coli can synthesize lysine, thus allowing for the production of greater quantities of lysine than from naturally occurring E. coli strains.  On April 25, 2006, Ajinomoto filed a complaint with the ITC alleging respondents Global Bio-Chem Technology Group Co. Limited, Changchun Dacheng Bio-Chem Engineering Development Co., Ltd., Changchun Balocheng Bio-Chem Development Co., Ltd., Changchun Dahe Bio Technology Development Co., Ltd. and Bio-Chem Technology (HK) Limited (collectively, GBT) violated Section 337 in the importation and sale of certain lysine feed products.  After the ITC initiated an investigation, but before the evidentiary hearing, GBT admitted infringement.  On July 31, 2008, ALJ Charles E. Bullock rendered an initial determination (“ID”) that the asserted claims of the ‘698 and ‘160 patents were invalid for violation of the best mode requirement, and that both patents were thus unenforceable due to inequitable conduct.  Ajinomoto petitioned the ITC for review.  On September 29, 2008, the Commission issued a notice determining to review, but taking no position on, ALJ Bullock’s finding that the ‘160 patent was invalid for failing to meet the best mode requirement based on fictitious data and that the ‘160 patent was procured by inequitable conduct. On appeal to the Federal Circuit, Ajinomoto did not dispute many of the ITC’s underlying factual findings but instead asserted error in the legal test employed by the ITC in defining the best more requirement.  In particular, Ajinomoto asserted that the best mode requirement applies to “innovative aspects” or “innovative features” of the invention.  The Federal Circuit, however, disagreed with Ajinomoto.  The court held that the best mode inquiry relates to the invention as claimed -- in this case, processes for making lysine using a genetically altered E. coli bacterium -- and is not limited to “innovative aspects or features,” which the court characterized as “vague” terms that “appear nowhere in our best mode case law.” The Federal Circuit concluded that the ITC applied the correct test to the best mode analysis, and that, in accordance with 35 U.S.C. § 112, first paragraph, the inventors were obligated to disclose their preferred host strains to the U.S. Patent and Trademark Office.  Because the Federal Circuit concluded that the best mode requirement had been violated based solely on the inventors’ failure to disclose their preferred host strains, the court did not address the other best mode violations found by the ITC. The Federal Circuit also rejected Ajinomoto’s alternative argument that it had satisfied the best mode requirement because it had publicly deposited a strain containing a lysic variant.  The court held that the strain deposited was not the strain preferred by the inventors, and thus, “the deposit failed to enable one skilled in the art to practice the inventors’ preferred embodiment and thus concealed the best mode.” Finally, with respect to inequitable conduct, the Federal Circuit noted that Ajinomoto failed to challenge the ITC’s finding of intent to deceive and that Ajinomoto’s sole argument on appeal of this issue was limited to a single sentence asserting that the inequitable conduct decision should be reversed because it was based upon an erroneous best mode conclusion.  The Federal Circuit characterized Ajinomoto’s argument as “conclusory” and held that it was therefore waived on appeal.  The Federal Circuit concluded that its decision not to address the ITC’s inequitable conduct decision “does not affect the finding of no violation of section 337 in this case” based upon its conclusion that the asserted patents were invalid for failure to comply with the best mode requirement.
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