Appellate Flip-Floppers


Yes, that’s right. I called a judge a flip-flopper. You’ll need to read the Leithem post to understand why I feel this way.

There was some flip-flopping in the Cordance case too. But that flip-flopping happened because the jury, trial judge, and Federal Circuit all had different views when it came to the question of whether one of Cordance’s patents is invalid.

In re Leithem, No. 2011-1030 (Fed. Cir. Sept. 19, 2011) (Judges Newman, Bryson, and Linn)

I think this case is rather funny (I mean this in a tragic sense).

Just a few weeks ago, I expressed my frustration with the In re Aoyama opinion, because the Federal Circuit used a new section of the patent statute to take down claims that had been rejected by the Board of Patent Appeals and Interferences (BPAI) on a completely different ground. Judge Linn wrote the majority opinion in that case, and Judge Newman dissented, stating that that this is a bad practice for the Federal Circuit to be engaging in.

In this case, two judges who heard the Aoyama case (Newman and Linn) decided that the BPAI had gone too far when it slightly changed its obviousness rejection. Linn wrote for a unanimous panel in this case. So while Judge Newman took seemingly consistent positions in these cases, I am having a hard time with Judge Linn’s views. Pot, meet kettle?

This appeal is focused on an obviousness rejection of a diaper technology. When the patent was being prosecuted at the PTO, the examiner rejected the claims as obvious. On appeal, the BPAI made a slightly different obviousness rejection that includes a “revised analysis” and additional fact-finding.

Leithem then asked the BPAI to reconsider its decision, arguing that it made a new obviousness rejection, which is improper. The BPAI responded by providing a new opinion that that its obviousness rejection is consistent with the examiner’s rejection. It felt that it did not need to give Leithem an opportunity to reopen prosecution so that the applicant could respond to the BPAI’s different rationale for rejecting the claim.

I’m confused. The Federal Circuit came down pretty hard on the PTO’s representative, and this opinion is very critical of the BPAI’s behavior and position. Yet it was willing to use indefiniteness (35 U.S.C. § 112) to support a BPAI decision that claims are not patentable because they are anticipated (that’s under 35 U.S.C. § 102). I’m having a hard time reconciling the positions the court took in these two cases.

Granted, the BPAI operates under the Administrative Procedure Act (APA), and the PTO regulations are based on the APA and other federal statutes. These statutes and regulations limit its ability to revise the examiner’s rejection without allowing a patent applicant an opportunity to reopen prosecution and respond to the altered rejection. But even though the Federal Circuit is not constrained by the same restrictions, shouldn’t it be listening to its own advice about protecting the applicant’s opportunity to respond to the agency or court’s revised positions?

I found the following quote particularly amusing: “Fairness dictates that the applicant . . . should be afforded an opportunity to respond to the Board’s new rejection.” (On page 9 of the opinion.) Wasn’t this an important fairness issue that Judge Newman identified in the Aoyama case?

But wait, there’s more. The court also expressed frustration with the BPAI’s defense of its reconsideration opinion. “The Board cannot play it so fast and loose in affirming an examiner’s rejection that it disregards procedural safeguards afforded to the applicant.” (Page 11 of the opinion.)

Enough said. Here’s the Leithem opinion.

Cordance Corp. v. Amazon.com, Inc., Nos. 2010-1502, -1545 (Fed. Cir. Sept. 23, 2011) (Judges Lourie, Lynn, and Dyk)

Cordance accuses Amazon’s famous 1-Click® online purchasing features of infringing its ’710 patent. It also alleges that Amazon’s customer review and feedback features infringe two additional Cordance patents (the ’325 and ’717 patents) relating to online feedback information. The case went to trial, and what happened after that can only be described as a three-ring circus.

In this case, several ’710 patent claims were found invalid by the jury, not invalid by the trial judge, and invalid by the Federal Circuit. Does this mean it was a close call? Maybe. But it was certainly a complicated case.

Delaware magistrate judge Thynge tried the case. For years, the Delaware federal courts have been clogged with patent cases, and they don’t move quickly. In an effort to move cases along, parties have the option to work with magistrate judge Thygne on discovery and have her try the case. Both parties must agree to do this. It looks like this was quite a trial for judge Thygne!

Taking a Patent Down, on Appeal

The ’710 patent invalidity case really hinged on whether its claims are entitled to use an earlier patent application filing date or a 1993 document that relates to the conception of the patented invention.

The Federal Circuit agreed with Amazon—Cordance did not link the information in the 1993 document or its earlier patent application with the ’710 claims. Also, it failed to explain what the disclosures in those earlier documents mean to one of skill in this art area or demonstrate that the earlier application provides written description support for the later claims (which is required in order to get priority back to the earlier application filing under 35 U.S.C. § 120). In particular, the court noticed that the earlier application does not seem to support one aspect of the claims relating to automatic completion of a purchase.

Next, the court considered Amazon’s trial testimony regarding its 1995 shopping cart system and concluded that Amazon’s system anticipates a number of the ’710 patent claims. It determined that the claim limitation “automatically completing the purchase of an item” does not require an absence of human involvement from the moment that an order is placed through shipment. Rather, it covers the time from a request to initiate or complete a transaction through the completion of the order. What Amazon does (with human intervention) after an order is complete is irrelevant to the claims. The court characterized contrary testimony by Cordance’s expert as “unpersuasive.” And it reversed the district court’s grant of judgment as a matter of law (JMOL) in favor of Cordance, since claims 1, 3, 5, 7, and 8 of the ’710 patent are anticipated.

It’s Hard to Second Guess a General Jury Verdict

In an unusual move, the Federal Circuit addressed a concern that came up during the oral argument, but was not briefed by either party. It relates to the general verdict form that was given to the jury.

Several invalidity theories were presented to the jury at trial. The jury concluded that most of the ’710 claims are invalid. At trial, Amazon argued that claims 2 and 9 of the ’710 patent are invalid because they either lack an adequate written description or derivation occurred (meaning the technology was really invented by someone else). The jury agreed, but because it received a general verdict form, which did not break the invalidity questionnaire into multiple theories, it is unclear which theory the jury agreed with. (I think that general jury verdict forms can be problematic, for just this reason.)

Now here’s where it gets wacky.

Cordance also filed for JMOL on several ’710 patent claims, alleging that Amazon presented insufficient evidence to support its derivation and written description theories. The district court granted the motion on derivation, except for claims 2 and 9. (Practice note: Cordance did not file a Rule 50(a) motion challenging the strength of evidence supporting Amazon’s defense of derivation on claims 2 and 9. This created a problem for it because the trial court can only grant JMOLs on grounds provided in the pre-verdict motions.) It also granted Cordance’s motion on written description grounds for claims 7-9. It sounds like the trial and post-trial proceedings were a real three-ring circus.

So after post-trial motions, claim 9 was still knocked out on derivation grounds, and the jury’s finding of invalidity on claim 2 was not disturbed.

When considering this appeal, the Federal Circuit applied a standard of review for general jury verdicts that was created in a criminal case in this civil context (the Third Circuit hasn’t even done that yet). Because the district court did not decide that the evidence supported both invalidity theories used against claim 9, it did not have the ability to say that the jury’s verdict was improper on the written description theory only. So the Federal Circuit determined that the JMOL ruling on written description had to be fixed.

Cordance wanted a new trial on the invalidity issues, but it failed to argue the proper standard or basis for a new trial to the Federal Circuit. That was a costly oversight. Claims 2 and 9 of the ’710 patent remain invalid.

Finally, the court rejected Cordance’s view that the district court improperly construed the term “feedback information” in its ’325 and ’717 patents. Cordance attempted to broaden the definition beyond what its patent specification describes, which is not permitted. So the court did not disturb the determination that several claims of these patents asserted against Amazon are not invalid and not infringed.

The parties argued a whole host of other issues in their appeal briefs, but the Federal Circuit did not need to deal with them after making its decisions on invalidity. (In other posts, I’ve discussed several drawbacks of the kitchen-sink approach to briefing issues for the appellate court.)

This case is complicated, and the Federal Circuit opinion is thick with procedural history. But if you want to read it, here’s the Cordance opinion.

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