Rembrandt Data Techs., LP v. AOL, LLC, No. 2010-1002 (Fed. Cir. April 18, 2011) (Judges Gajarsa, Linn, and Dyk)

“License or no license: that is the question.”  The Federal Circuit’s answer was “yes.”  After reviewing a complicated licensing and patent transfer history, the court held that there was no patent infringement because Rembrandt’s patent rights were exhausted after the first sale.  This case also involves industry standards relating to telecommunication protocols and mixing of method claims and apparatus claims in the same patent, which is an issue that the court does not encounter often.

The Federal Circuit also affirmed the district court’s holding that a number of Rembrandt’s patent claims are indefinite, stating that it has “repeatedly and consistently recognized that courts may not redraft claims, whether to make them operable or to sustain their validity.”  Slip op. at 16.  It concluded that these claims are not salvageable through an alternative construction, as “the correction suggested by Rembrandt is ‘not minor, obvious, free from reasonable debate or evident from the prosecution history.’”  Id.

Read the Rembrandt opinion here.

 

Akamai Techs., Inc. v. Mass. Institute of Tech., Nos. 2009-1372, -1380, -1416, -1417 (April 20, 2011) (en banc order) (nonprecedential)

The court has agreed to hear the Akamai divided infringement case again, en banc, and requested supplemental briefing on the following question:

“If separate entities each perform separate steps of a method claim, under what circumstances would that claim be directly infringed and to what extent would each of the parties be liable?”

The court will hear the appeal again, based on the original filed briefs and any supplemental briefs relating to the new question that the parties have been asked to address.  The original panel opinion has been vacated.  For more information about the divided infringement issue that has been brewing at the Federal Circuit, see our post on McKesson.

Read the en banc order here.

 

Sanders v. The Mosaic Company, No. 2010-1418 (Fed. Cir. April 20, 2011) (Judges Prost, Schall, and Moore)

Saunders involves a claim construction analysis and the question of whether the prosecution history results in disclaimer of non-homogeneous mixtures of a fertilizer product.  In an unusual decision, the court determined that the prosecution history does not limit the claim terms, which are distinguishable from the arguments and terms at issue during prosecution of the patent application.

Additionally, the court affirmed the trial court’s holding that the complaint could be amended to add an inequitable conduct claim, concluding that this claim describing an expert declaration filed with the Patent Office that failed to disclose an expert’s relationship with the co-plaintiff in the litigation and failed to list papers that he co-authored with the inventor on his submitted CV was pled with sufficient specificity.

Read the Sanders opinion here.

 

TiVo Inc. v. EchoStar Corp., No. 2009-1374 (Fed. Cir. April 20, 2011) (en banc)

The Federal Circuit issued a much-anticipated en banc opinion in the TiVo digital video recorder (DVR) patent case, which followed a contempt proceeding based on a permanent injunction issued against EchoStar.  The court had directed the parties “to address the circumstances under which a finding of contempt by a district court would be proper as to infringement by newly accused products and also address the proper time to raise the defenses of vagueness and overbreadth of an injunction.”  Slip op. at 7-8.

The post-patent trial injunction against EchoStar prohibited, among other activities, the making, using, offering for sale, or selling of satellite television receivers that had been found to infringe the TiVo patents.  EchoStar was also required to disable DVR functionality in receivers held by current customers and any new receivers that would be provided to customers in the future.

EchoStar claimed during the contempt proceeding that it redesigned its infringing receivers so that they no longer met a number of claim limitations.  The district court found that the modifications were not colorably different from the infringing software and that contempt proceedings were appropriate under the Federal Circuit’s decision in KSM Fastening Systems v. H.A. Jones Co., 776 F.2d 1522, 1532 (Fed. Cir. 1985).  After finding that the redesigned devices continued to infringe the software patent claims, the district court concluded that EchoStar was in violation of the “infringement provision” of the injunction.  The district court also disagreed with EchoStar’s position that it was not required to disable the redesigned products because they were not adjudged infringing products; EchoStar waived any argument that the injunction should be modified or clarified to exclude the redesigned devices because it did not make the argument before the injunction issued.  In light of this contempt finding, the court imposed sanctions of almost $90 million and awarded TiVo damages for continued infringement of its patents.

Sitting en banc, the Federal Circuit determined that the contempt analysis was “unworkable” and clarified the scope of the colorable differences test that the district court applied in this case.  The court held the two-step test articulated in KSM is “unsound in contempt cases” because it confuses the merits of the infringement inquiry with the threshold question of whether a contempt proceeding is the proper context for evaluating infringement by a redesigned product.  Slip op. at 7, 17.  Under the KSM test, the court must determine whether the contempt proceeding is an appropriate setting to adjudge infringement by a redesign product.  The court makes this determination by comparing the accused product with the infringing product to determine if there is more than a “colorable difference” between them, such that “substantial open issues exist” relating to the infringement question.  In such circumstances, a new trial is the appropriate vehicle to decide whether the redesigned product infringes.  Otherwise, the court can proceed with a contempt proceeding for the purpose of determining whether the redesigned product infringes the previously-adjudicated claims.

In TiVo, the Federal Circuit collapsed the KSM inquiry into one step.  Under this revised inquiry, the trial court should determine whether a new trial or a contempt proceeding is the proper forum for consideration of the infringement issue based on the facts presented in each case, using its considerable discretion.  Additionally, the court stated that on appeal it will only review whether the injunction at issue is both enforceable and violated, and whether the sanctions imposed were proper.  When applying the colorable differences test in the future, the trial courts have also been instructed to consider whether the differences between the two products are significant, which is “much dependent on the nature of the products.”  Slip op. at 20.

Applying its new one-step inquiry, the Federal Circuit rejected EchoStar’s argument that its good faith efforts to design around the patent claims, including receiving a noninfringement opinion from patent counsel, saves it from a contempt finding.  The Federal Circuit reaffirmed the view that under Supreme Court precedent a lack of intent to violate an injunction alone cannot save an infringer from a finding of contempt, although it can be considered in assessing appropriate penalties for that violation.  In light of its new guidance, however, the court vacated the district court’s contempt ruling and damages award relating to the infringement provision in the injunction and sent the issues back to the district court for reconsideration.

Taking up EchoStar’s arguments relating to the “disable provision” of the injunction, the Federal Circuit held that the district court’s injunction was not unenforceable due to vagueness or overbreadth.  It also addressed the appropriate time to raise these defenses to enforcement of an injunction.  The court concluded that where a party has bypassed opportunities to present its asserted vagueness claim on appeal or through a motion to clarify or modify the injunction, the party cannot disregard the injunction and then object to being held in contempt when the courts conclude that the injunction covered the party’s conduct. The court also disagreed with EchoStar’s overbreadth argument, concluding that a broad reading of the disablement provision to include all DVR functionality is not “unnatural.”  Having failed to raise the issue on direct appeal, EchoStar is now barred from using it as a defense to the district court’s finding of contempt.  Thus, the Federal Circuit affirmed the district court’s finding that EchoStar is in contempt of the injunction’s disablement provision and the sanctions award, agreeing with the lower court that EchoStar waived these arguments.

Five Federal Circuit judges dissented from the affirmance of the finding of contempt relating to the disablement provision, the related sanctions award, and remand of the infringement issue to the district court, expressing the belief that the modified software does not infringe.  New Federal Circuit Judges O’Malley and Reyna participated in the opinion, siding with the majority.  Without the new judges, the court could have been tied 5-5.

Read the en banc opinion here.

 

Creative Internet Advertising Corp. v. Yahoo!, Inc., No. 2010-1215 (Fed. Cir. April 22, 2011) (Judges Newman, Clevenger, and Bryson) (nonprecedential)

As Web 2.0 technologies become more prevalent, so will infringement disputes related to these second-generation Web technologies.  Yahoo! delivers instant messaging technology that includes functionality that inserts background advertisements unless users opt out of the advertisements.  The parties in this case suffered from a lack of construction of certain critical claim elements until the middle of trial, and the Federal Circuit took the district court to task for this case-management decision:

“The district court’s refusal to instruct the jury on the question whether the claim required all three elements to operate on the same message had the effect of leaving a critical question of claim construction to the jury. The court erred in leaving a central question of claim construction to the jury over Yahoo!’s objection.”  Slip op. at 8.

Concluding that the unresolved construction issue allowed Creative to invite the jury to find infringement on a theory contrary to the proper construction of the claim, the Federal Circuit reviewed the construction at the request of Yahoo!, even though Yahoo! won that construction at the trial level.  It also concluded that the infringement evidence was not sufficient for a reasonable jury to conclude that the Yahoo! Messenger infringed the patent.

Judge Clevenger wrote a strong dissent, concluding that the jury’s verdict of infringement should be sustained and taking the majority to task for ignoring evidence and precedent that supported the alternative conclusion.

Read the Creative opinion here.

 

Lexion Medical, LLC v. Northgate Techs., Inc., No. 2009-1494 (Fed. Cir. April 22, 2011) (Chief Judge Rader, Circuit Judges Dyk and Prost)

Lexion demonstrates that creative use of an expert declaration explaining a claim’s meaning can help win the case.  This case involved a second appeal of claim construction issues relating to this patent.  In 2008, the court vacated the district court’s infringement judgment (a jury verdict) after construing other claim terms.  The new declaration was presented to the district court after remand, when both parties moved for summary judgment on the infringement issue in light of the Federal Circuit’s prior claim constructions.

Here, the Federal Circuit affirmed the district court’s construction of a claim term relating to an apparatus for heating and humidifying gas to a particular temperature for use during laparoscopic surgical procedures.  The Federal Circuit first noted that claim interpretations should “harmonize” the several elements of the claim to define a workable invention.  It then considered a number of limitations, as a collection, and a supplemental expert declaration filed after trial and remand in light of the Federal Circuit’s claim construction opinion.  After reviewing this contextual evidence and supplemental expert analysis, the court concluded that the context informs the proper interpretation of the claim language and that the district court did not abuse its discretion in entertaining a new declaration focused on the new claim construction issues.

Read the original opinion here.

 

 

In re Xoft, Inc., No. 2011-m983 (Fed. Cir. April 22, 2011)

The Federal Circuit has considered a lot of venue-transfer-related petitions for mandamus lately.  The District of Delaware denied Xoft’s motion to transfer the case to the Northern District of California and Xoft requested that the Federal Circuit vacate that order.  The Federal Circuit has asked the respondents, Carl Zeiss entities, to respond to that petition by May 9, 2011.  That is a positive sign for Xoft.  Stay tuned….

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