We have a broad variety of opinions that were issued the last week of September at the Federal Circuit. Up first is the latest episode of Stent Wars, which we’ve written about before. We also have a dispute about whether there’s a dispute and an opinion about the infrequently used doctrine of intervening rights.
So much time, so little to do—wait. Strike that. Reverse it. And read on!
Cordis Corp. v. Boston Scientific Corp., Nos. 2010–1311, –1316 (Fed. Cir. Sept. 28, 2011) (Judges Bryson, Mayer, and Gajarsa)
Undulating into the willing and yielding day,
Lost in the cleave of the clasping and sweet-flesh’d day.
—Walt Whitman, I Sing the Body Electric
Stents are back! This case may be the Bleak House of stent cases—it’s been going for 14 years, and this is the second time it’s been at the Federal Circuit.
The dispute is about whether Boston Scientific’s balloon-expandable stents (which are used to clear blocked arteries) infringe Cordis’s patent. The main issue this time is the meaning of the word “undulating” in the claims of Cordis’s asserted patent. As part of claim construction, the trial court held that “undulating” requires a “crest” and a “trough.” That is, it has to go up and down. Here’s a picture of Boston Scientific’s accused stent with the important section circled:
Does that look “undulating” to you? It didn’t to the court. The Federal Circuit agreed that Boston Scientific’s stent doesn’t have an undulating section and therefore doesn’t infringe Cordis’s patent.
Is this the end of the Stent Wars? Not likely, but read the opinion and tell me what you think.
Is This the Right Room for an Argument?
Powertech Technology, Inc. v. Tessera, Inc., No. 2010–1489 (Fed. Cir. Sept. 30, 2011) (Judges Dyk, Moore, and O’Malley)
And now for something completely different:
Is this the right room for an argument? Powertech Technology (PTI) says that there is a dispute, and Tessera says there isn’t.
Tessera licenses its patents for packaging chips to a number of manufacturers, including Powertech (PTI). We wrote about a related case a few months ago, when Tessera was suing a number of companies at the International Trade Commission (ITC), including some of PTI’s customers. In that case, Tessera claimed that manufacturers who bought their parts from licensed suppliers weren’t actually licensed because the suppliers had fallen behind on royalty payments. The Federal Circuit disagreed, holding that Tessera’s patent rights were exhausted by the licenses. (Saying that patent rights are exhausted means that a product that’s licensed can be sold and resold, and it’s still licensed. You can’t sell something to one company and then sue the company’s customers for patent infringement. Once you sell your product or give a license, that’s it.) If there were contract issues, it would have to deal with those separately, but the licenses didn’t vanish.
While those disputes were going on, PTI sued for a declaratory judgment that one group of its products don’t infringe Tessera’s ’106 patent and that the ’106 patent is invalid. The district court dismissed the suit, finding that there was no legal dispute between PTI and Tessera. The district court reasoned that PTI has a license from Tessera (which is current on payments), and the royalties PTI pays under the license aren’t affected if its products don’t infringe the ’106 patent or the ’106 patent is held invalid. So from PTI’s perspective, there’s no dispute to litigate.
The Federal Circuit disagreed. First, the court pointed out that Tessera had created an actual controversy by taking the position in the ITC case that PTI’s customers weren’t licensed because PTI wasn’t up-to-date with its royalty payments. It couldn’t turn around now and rely on the license it previously claimed was gone. Worse for Tessera, the Federal Circuit instructed the district court to apply its decision in the earlier case, which means that there will be a district court holding that Tessera’s patent rights are exhausted with respect to PTI’s customers.
This is actually pretty important. Decisions from the ITC don’t have a preclusive effect on district courts, meaning that the courts don’t have to abide by whatever the ITC does. (This is a big reason why patent owners will sue both in district court and at the ITC.) Tessera did sue PTI’s customers separately in district court, but the fact that the ITC held that Tessera’s patents were exhausted has no effect on that case. The Federal Circuit is basically filling in the gap, instructing the district court here to follow its patent exhaustion holding.
The court also held that the contract dispute about whether PTI’s royalties would be affected by a judgment of non-infringement or invalidity of the ’106 patent was enough to create an actual controversy.
You can read the Powertech opinion at the Federal Circuit’s website.
Slippin’ In(tervening Rights)
Marine Polymer Technologies, Inc. v. Hemcon, Inc., No. 2010–1548 (Fed. Cir. Sept. 26, 2011) (Judges Lourie, Gajarsa, and Dyk)
And now a little blues from Buddy Guy to set the tone for our next case (which involves slipping in infringing products through “intervening rights”):
The concept of intervening rights doesn’t come up all that often in patent cases. After a patent issues, it can be reviewed by the patent office through either reissue or reexamination. And sometimes, the scope of the patent will change, because the patent owner amended the claims. (Usually, the claims become narrower, although it’s possible to broaden claims through a reissue that’s filed less than 2 years after the patent issues.)
In the case of a reissue, the patent is actually surrendered to the U.S. Patent & Trademark Office (PTO) and is then reissued as if the first patent never existed. So, in principle, if anyone infringed the original patent between the date it issued and the reissue date, that infringement wouldn’t count. The rights to use the patent in that period are called “intervening rights.” Patents that go through reexamination aren’t surrendered to the PTO, but if the claims are substantially changed in scope, intervening rights are created for those claims. Here’s an illustration of the intervening rights period:
The issue here is what happens if the patent owner doesn’t amend the claims, but instead makes an argument to the PTO that narrows their scope.
Are we compatible?
Marine Polymer has a patent covering a polymer for accelerating hemostasis (the stopping of blood flow). The claims require that the polymer be “biocompatible,” which relates to the reaction a body has to the polymer. There are a few different tests that measure this reactivity. For example, there is something called an elution test that produces a number between 0 and 4, with 0 being no reaction and 4 being a severe reaction. The patent says that a score from 0 to 2 is good enough to be biocompatible.
The problem came during claim construction (the part of the case where the judge determines the meaning of key claim terms). The judge found that “biocompatible” means, in part, that there is no detectible reactivity. For example, the score on the elution test would be 0.
Meanwhile, the patent was also in reexamination. The patent examiner didn’t agree with the court’s construction, because there were dependent claims that specifically required elution scores greater than 0. This created a problem for Marine Polymer in getting around the prior art. So, to get the claim construction it wanted, Marine Polymer cancelled the dependent claims that conflicted with the judge’s construction. The examiner then agreed to use that narrower meaning of “biocompatible.”
You don’t look different, but you’ve changed
We now have independent claims that haven’t been amended at all. But their scope has definitely changed, because the original version included a broader meaning of “biocompatible.”
So it makes sense that the Federal Circuit found that intervening rights were created by Marine Polymer’s interactions with the PTO. This means that any polymer manufactured before the date of the reexamination certificate counts as not infringing. These are “absolute intervening rights.”
It is also possible to have “equitable intervening rights,” which would allow HemCon to keep manufacturing its infringing products even after the certificate date. Equitable intervening rights are intended to protect manufacturers who cannot easily switch to manufacturing non-infringing versions. Ultimately, the court sent the case back to the district court to determine whether equitable intervening rights should apply.
Check out the Marine Polymer opinion at the Federal Circuit’s website.