December Federal Circuit Newsletter (Japanese)
December Federal Circuit Newsletter (Chinese)
Bound to Happen: Inherent Property Leaves No Question of Reasonable Expectation of Success
In Cytiva Bioprocess R&D Ab v. Jsr Corp., Appeal No. 23-2074, the Federal Circuit held that a claim limitation merely reciting an inherent property or result of an otherwise obvious composition or process can be found obvious without finding a reasonable expectation of success.
JSR filed six inter partes reviews on three patents owned by Cytiva. The patents related to compositions for chromatography matrices and processes for isolating target compounds using those matrices. The Board held that all of the composition claims and most of the process claims were unpatentable, but found four dependent process claims not unpatentable. The Board held that JSR’s obviousness arguments regarding the dependent process claims required a showing of reasonable expectation of success. Cytiva appealed on the claims found unpatentable, and JSR cross-appealed on the four dependent claims found not unpatentable.
The Federal Circuit affirmed the Board’s decision that most of the challenged claims were unpatentable, and reversed the Board’s decision that the four dependent process claims were not unpatentable. The Court noted that the dependent process claims had no material differences from corresponding composition claims that the Board found unpatentable for merely reciting an inherent feature. The Federal Circuit disagreed with the Board’s requirement that JSR show a reasonable expectation of success for the dependent process claims, since if a limitation of claim is inherent “there is no question of a reasonable expectation of success in achieving it.” Thus, because the dependent process claims merely recited the result of an inherent property of an otherwise obvious composition, the claims were obvious.
Unsupported Expert Testimony Cannot Create a Genuine Issue of Material Fact
In Mirror Worlds Techs., LLC v. Meta Platforms, Inc., Appeal No. 22-1600, the Federal Circuit held that expert testimony that is conclusory, supported by inadmissible evidence, or fails to address key claim limitations does not suffice to create a genuine issue of material fact sufficient to avoid summary judgment of non-infringement.
Mirror Worlds alleged that Meta’s backend systems infringed several patents covering stream-based data organization. After the close of discovery, Meta moved for summary judgment of non-infringement, arguing that its systems did not meet various claim limitations regarding sources of data and how data was presented. The district court granted summary judgment of non-infringement, agreeing with Meta that Mirror Worlds had not presented evidence sufficient to show that Meta’s systems practiced each limitation of the asserted claims. Mirror Worlds appealed, arguing that the district court overlooked its expert’s testimony, which it alleged created a genuine issue of material fact sufficient to avoid summary judgment.
The Federal Circuit upheld the district court’s findings, agreeing that Mirror Worlds had not produced sufficient evidence to create genuine disputes of material fact. In particular, the Court noted that Mirror Worlds’s expert improperly relied on inadmissible, unauthenticated screenshots created by a third party; that other aspects of the expert’s testimony were conclusory; and that the expert failed to address the full scope of each claim limitation. The Federal Circuit held that such testimony was not sufficient to create a genuine issue of material fact.
An Award of Attorneys’ Fees and Costs under 35 U.S.C. §285 Does Not Preclude Sanctions Pursuant to the Court’s Inherent Authority
In Ps Products Inc. v. Panther Trading Co. Inc., Appeal No. 23-1665, the Federal Circuit held that section 285 does not prohibit an award of deterrence sanctions under the court’s inherent authority.
PSP sued Panther for alleged infringement of a design patent. Panther filed motions to dismiss for failure to state a claim and improper venue. In response, PSP moved to voluntarily dismiss the case with prejudice, which the court granted. After the dismissal, Panther moved for attorney fees and costs as well as a monetary deterrence sanction. The district court granted the motion and ordered PSP to pay a $25,000 deterrence sanction under the court’s inherent power. PSP appealed the deterrence sanction, and Panther requested attorney fees and costs for defending the appeal.
The Federal Circuit affirmed the award for sanctions but declined to award attorneys’ fees. The Federal Circuit held the district court did not clearly err by both awarding attorneys’ fees and imposing a deterrence sanction because Section 285 does not preclude a district court from separately imposing sanctions under another authority. The Federal Circuit also held PSP’s continued presentation of meritless infringement and venue arguments did not make the appeal frivolous as argued, and thus declined to award attorneys’ fees for the appeal.
“Necessary Bridge” Does Not Equal Motivation to Combine
In Palo Alto Networks, Inc. v. Centripetal Networks, LLC, Appeal No. 23-1636, the Federal Circuit held that the Board’s finding of no “necessary bridge” between the teachings of two references lacked clarity and did not resolve whether there was a motivation to combine the references.
Palo Alto Networks, Inc. (“PAN”) petitioned for inter partes review of a patent owned by Centripetal Networks, LLC. The Patent Trial and Appeal Board issued a final written decision finding PAN had not established obviousness. The Board indicated PAN failed to establish “the necessary bridge” connecting a first claimed element taught by one reference and a second claimed element taught by another reference. PAN appealed.
The Federal Circuit held the Board failed to explain its holding and reasoning regarding motivation to combine. The Court found it was unclear what the Board meant by “necessary bridge.” According to the Federal Circuit, the Board improperly considered the two references in isolation instead of together. The Federal Circuit vacated and remanded for the Board to clarify its holding.
Deleted Definition “Highly Significant” for Claim Construction
In DDR Holdings, LLC v. Priceline.Com LLC, Booking.Com B.V., Appeal No. 23-1176, the Federal Circuit held that deleting a definition provided in provisional application from the final specification evidenced patentee’s intent to exclude deleted language from claim scope.
DDR Holdings, LLC (“DDR”) sued Priceline.com LLC and Booking.com B.V. (collectively, “Priceline”) for infringement of a patent relating to a composite web page that displays visual elements of a host website with content from a third party “merchant.” Priceline argued it did not infringe because the claim term “merchant” was limited to purveyors of goods alone and did not encompass purveyors of services. DDR argued that “merchant” encompassed purveyors of goods and services based on a definition provided in the provisional application to which the asserted patent claimed priority. However, the patentee deleted that definition from the final specification, which contained no reference merchant services. The district court agreed with Priceline and construed “merchant” to be limited to purveyors of goods.
The Federal Circuit affirmed, holding that the patentee’s deletion of language between the provisional application and the asserted patent’s specification was “highly significant” to its claim construction analysis. The court rejected DDR’s argument that the definition from the provisional should apply because the provisional is incorporated by reference in the asserted patent. The Federal Circuit found that deleting the definition referencing “services” showed “an evolution of the applicant’s intended meaning” of “merchants.”
“Quotation” Letter Found to Constitute Offer Invalidating Patents
In Crown Packaging Technology, Inc. v. Belvac Production Machinery, Inc., Appeal No. 22-2299, the Federal Circuit held that an offer for sale described as a “quotation,” containing specific and complete terms and directed to an entity in the U.S., constitutes a commercial offer for sale.
Crown Packaging Technology, Inc. sued Belvac Production Machinery, Inc., alleging infringement of three patents directed to necking machines used in making metal beverage cans. Belvac argued the patents were invalid as anticipated under the pre-AIA on-sale bar (35 U.S.C. § 102(b)) because Crown offered to sell a necking machine embodying the asserted claims in the U.S. more than a year before its patents were filed. The district court granted summary judgment to Crown, ruling the patents were not invalid under the on-sale bar. After a jury trial, the court entered a judgment that the asserted claims were not invalid and not infringed.
The Federal Circuit reversed the district court’s validity finding because it held the asserted patents were invalid under the on-sale bar. The Federal Circuit found that, while Crown’s letter to a third-party was a “quotation,” it still constituted an offer to sell the claimed inventions. Specifically, the court noted that the letter was signed by Crown’s representative, sent to a specific third-party, and included a detailed description of the claimed inventions, a price, and delivery terms. The court further found that Crown’s offer was made in the U.S. because the quotation letter was sent to the third-party’s place of business in Colorado. Because it found the on-sale bar applied, the court reversed and remanded for entry of judgment in Belvac’s favor.
A User of Part of a Claimed System Must Control and Benefit From the Entire System to Infringe
In Cloudofchange, LLC v. Ncr Corporation, Appeal No. 23-1111, the Federal Circuit held that a party that uses only a part of a patented system is not liable for patent infringement under a theory of direct infringement by use when the party does not control the system as a whole and does not obtain benefit from use of the system as a whole.
CloudofChange, LLC (“CloudofChange”) sued NCR Corporation (“NCR”) alleging patent infringement of two patents directed to point of sale (“POS”) systems. The claims of the patents expressly required two entities: a vendor hosting a web server and a subscriber possessing a POS terminal that accesses the web server via an Internet connection. The accused product, NCR Silver, allowed merchants to edit menus, perform transactions, and build their own POS screen. However, under its merchant agreement, NCR made users responsible for supplying the required Internet connection. At the district court, a jury found that NCR directly infringed. In denying NCR’s motion for JMOL of no infringement, the district court concluded that NCR directed its merchants to perform by requiring them to maintain Internet access via the Merchant Agreement.
The Federal Circuit reversed the district court’s denial of JMOL and vacated the jury verdict. Citing its precedent in Centillion Data Sys., LLC v. Qwest Commc’ns Int’l, Inc., 631 F.3d 1279 (Fed. Cir. 2011), the court noted that a party that does not possess an entire system nevertheless “uses” the system for purposes of infringement when the party controls the system as a whole and obtains benefit from it. The Federal Circuit explained that NCR’s merchants put the patented system into service because they use the POS terminal to initiate a demand for service and benefit from the back end providing that service. Therefore, the Federal Circuit concluded that merchants, rather than NCR, control the system as a whole and obtain benefit from it. The court also concluded that NCR was not vicariously liable for its merchants’ use because NCR did not direct or control the merchants to subscribe to or use the NCR Silver system. Although NCR’s Merchant Agreement made merchants responsible for maintaining Internet access, it did not require merchants to actually use the entire NCR Silver system. Thus, the Federal Circuit held that NCR was not liable.
