Welcome to Winston & Strawn’s Federal Circuit Patent Decision Summaries. This bulletin provides a short summary of, and links to, the precedential patent cases decided by the Federal Circuit last week. We hope that these summaries are useful in keeping you updated on the Federal Circuit’s patent decisions.

One system that accomplishes a function mechanically and another system that accomplishes the same function using magnetic force function in fundamentally different ways for purposes of determining infringement.

General Protecht Group, Inc. v. Internal Trade Commission, 2009-1378, -1387, -1434 (Fed. Cir. Aug. 27, 2010)

The accused infringers appealed from a final determination of the International Trade Commission (“ITC”) that certain of their ground fault circuit interrupters (“GFCIs”) infringed various patents and that those patents were not invalid.  The Federal Circuit reversed the ITC’s findings as to infringement.

At the outset, the Federal Circuit noted that it reviews the ITC’s final determination under the standards of the Administrative Procedure Act, reviewing the ITC’s legal determinations de novo and its factual findings for substantial evidence.

As to one of the key claim terms at issue, “load terminals,” the key point was whether that term includes “receptacle outlets.”  A majority of the court found that “load terminals” did not include “receptacle outlets,” explaining that the patent never describes “receptacle outlets” as “load terminals,” and that drawings in the patent all labeled the “load terminals” separately from the “receptacle outlets.”  The majority further rejected any expert testimony that may have been to the contrary, noting that “conclusory, unsupported assertions by experts as to the definition of a claim term are not useful to a court.”  Here, none of the experts identified a particular meaning in the art for load terminals,” and were, in any event, “fastidious” in referring to “receptacle outlets” and “load terminals” as separate elements.

The majority next addressed whether the accused products’ use of a magnet performed the function of the “latching means” described in one of the patents.  According to the majority, there was no infringement here because “one system that accomplishes a function mechanically and another system that accomplishes the same function using magnetic force function in fundamentally different ways.”  Moreover, while the experts testified that magnets were well known as latches, they did not testify that they performed the latching means function in substantially the same way as the mechanical latch disclosed in the patent.

Judge Newman dissented, stating that the administrative law judge’s Initial Decision of 170 pages and the ITC’s supplemental rulings of 32 pages “present a full understanding of the technology, with rigorous discussion of the evidence and extensive analysis, findings, and conclusions.”  In contrast, the majority “finds its own facts, applies theories that were not raised by any party, uses incorrect standards of review, and creates its own electrical technology contrary to the uniform and unchallenged expert testimony.”

A copy of the opinion can be found here.

Any person has standing to pursue an action under Section 292 because a violation of that statute inherently constitutes an injury to the United States and, consequently, to the government's assignee.

Stauffer v. Brooks Brothers, Inc., No. 2009-1428, -1430, -1453 (Fed. Cir. Aug. 31, 2010)

Plaintiff purchased bow ties manufactured by defendant and subsequently brought a qui tam action under 35 U.S.C. § 292 alleging that defendant had falsely marked its bow ties with patents that had expired in 1954 and 1955.  The district court granted defendant’s motion to dismiss for lack of standing and also denied the United States’ motion to intervene.  Plaintiff and the United States appealed. 

Under Section 292, “whoever marks … any unpatented article” with the word “patent or any word or number importing that the same is patented, for the purpose of deceiving the public … [s]hall be fined not more than $500 for every such offense.”  Moreover, the statute provides that “any person may sue for the penalty, in which event one-half shall go to the person suing and the other to the use of the United States.” (emphasis added). 

The Federal Circuit noted that “a qui tam plaintiff, or relator, can establish standing based on the United States’ implicit partial assignment of its damages claim to ‘any person.’”  Thus, the court stated, “even though a relator may suffer no injury himself, a qui tam provision operates as a statutory assignment of the United States’ rights, and ‘the assignee of a claim has standing to assert the injury in fact suffered by the assignor.’”  However, prior to doing this, plaintiff must assert that the United States has met the necessary requirements for standing by suffering an injury in fact causally connected to defendant’s conduct. 

The Federal Circuit stated that “Congress has, by enacting section 292, defined an injury in fact to the United States.”  Therefore the court held that “a violation of that statute inherently constitutes an injury to the United States. …  Because the government would have standing to enforce its own law, [plaintiff], as the government’s assignee, also has standing to enforce section 292.”  The Federal Circuit found that the government’s claims could be assigned to “any person,” even one that had no concrete injury.

The Federal Circuit also held that the district court erred in denying the United State’s motion to intervene.  The court held that “the government has an interest in enforcement of its laws and in one–half the fine that Stauffer claims, disposing of the action would ‘as a practical matter impair or impede the [government’s] ability to protect its interest,’ and [plaintiff] may not adequately represent that interest.”  Furthermore, the Federal Circuit stated that “the government would not be able to re‑cover a fine from [defendant] if [plaintiff] loses, as res judicata would attach to claims against [defendant] for the particular markings at issue.”

A copy of the opinion can be found here.

A patent is sufficiently enabled with respect to utility when the specification discloses information not found in the prior art, such as detailed descriptions of ongoing human clinical trials, from which a person of skill in the art would conclude that the claimed invention was useful.

Eli Lilly and Co., v. Teva Pharmaceuticals USA, Inc., 2010-1005, -1033 (Fed. Cir. Sept. 1, 2010)

The patentee asserted various patents directed to the drug raloxifene hydrochloride used to treat postmenopausal osteoporosis.  The district court found that the alleged infringer’s generic product infringed four of the patents, which were found to be non-obviousness and enabled.  The district court also found that two other patents were invalid for lack of written description.  Both parties appealed the district court’s findings.

The Federal Circuit affirmed on all issues because there was no “definite and firm conviction” that the district court made a mistake.  As to non-obviousness, the district court concluded that known bioavailability concerns with raloxifene would have precluded a reasonable expectation of success that the drug could be used to treat postmenopausal osteoporosis.  In light of this, the Federal Circuit agreed that the alleged infringer presented no evidence that would “teach, suggest, or motivate or supply any common sense reason for a person of ordinary skill in the art to reject the bioavailability concerns and routinely, simply, or easily arrive at the inventive result.”

The Federal Circuit also affirmed as to the issue of enablement.  The alleged infringer argued that if the asserted patents were in fact non-obvious in view of the prior art, then the same patents could not be enabled because of the prevailing view that raloxifene would not work in humans.  The alleged infringer cited the court’s previous holding in Rasmusson v. SmithKlein Beecham, which stated “[i]n the context of determining whether sufficient utility as a drug… in human therapy has been alleged, it is proper for the examiner to ask for substantiating evidence unless one with ordinary skill in the art would accept the allegations as obviously correct.”  While agreeing that the Rasmussen case set forth the proper standard to be applied, the Federal Circuit found the alleged infringer’s argument unavailing because the specification of the patent-in-suit disclosed additional information – “two sets of information not found in the prior art.”  First, the patents described the results of previous raloxifene studies and explained how the drug could be effective in treating human bone loss.  Second, the patents also described in detail a human clinical study, which was ongoing at the time the application was filed, but for which results were not yet available.  Based on these disclosures, the court found no clear error in the district court’s conclusion that the asserted patents enabled the alleged utility of raloxifene.

The Federal Circuit also affirmed as to the issue of lack of written description, finding no clear error with the district court’s conclusion that the specification did not “reasonably convey to those skilled in the art that the inventor had possession of the claimed subject matter as of the filing date.” 

A copy of the opinion can be found here.

A patentee does not misuse his patent when he offers to license a patent while inducing a third party not to license its separate patent covering competing technology.

Princo Corp. v. Int'l Trade Comm'n, 2007-1386 (Fed. Cir. Aug. 30, 2010)

The patentee and its joint venture partner established standards for compact disks.  The patentee and its joint venture partner each owned various patents covering these standards and jointly licensed their combined patents.  The alleged infringer argued that the patentee had misused its patents because in conjunction with the patentee, the joint venture partner refused to license separately the joint venture partner’s patent, which could compete with the patentee’s patents.  The International Trade Commission (“ITC”) held that the doctrine of patent misuse did not bar the patentee from enforcing its patents against the alleged infringers.  On appeal, the Federal Circuit affirmed that the patentee’s conduct in agreeing with its joint venture partner to license the joint venture partner’s patent as part of the standard license with the patentee’s patents was not patent misuse.

“[T]he doctrine of patent misuse is [] grounded in the policy-based desire to ‘prevent a patentee from using the patent to obtain market benefit beyond that which inheres in the statutory patent right,’” and “the key inquiry under the patent misuse doctrine is whether, by imposing the condition in question, the patentee has impermissibly broadened the physical or temporal scope of the patent grant and has done so in a manner that has anticompetitive effects.”

Here, the patentee was not imposing restrictive conditions on the use of its patents to enlarge the physical or temporal scope of those patents.  Instead, the alleged act of patent misuse was the claimed horizontal agreement between the patentee and the joint venture partner to restrict the availability of the joint venture partner’s patent—an entirely different patent that was never asserted in this case.  Because “[p]atent misuse will not be found when there is ‘no connection’ between the patent right and the misconduct in question, or no ‘use’ of the patent” the court found no link between the putative misconduct at issue in this case and the licensing of the patents-in-suit.

The purported agreement between the patentee and the joint venture partner had none of the features that courts have characterized as constituting patent misuse. “In particular, it does not leverage the power of a patent to exact concessions from a licensee that are not fairly within the ambit of the patent right.”  “If the purported agreement between [the patentee and the joint venture partner] not to license the [joint venture partner’s] technology is unlawful, that can only be under antitrust law, not patent misuse law; nothing about that agreement, if it exists, constitutes an exploitation of the [patentee’s] patents against [the patentee’s] licensees.”

The court also found that the alleged infringers failed to establish that the alleged agreement to suppress the joint venture partner’s technology had anticompetitive effects “in the relevant market.” “Whether viewed as a matter of patent misuse or in light of general antitrust principles, [the] claim regarding the alleged agreement fails because [the patentee and the joint venture partner] acted legitimately in choosing not to compete against their own joint venture.”  The alleged infringer also failed to show that the asserted agreement had any anticompetitive effects because, as the Commission found, “the [joint venture partner’s] technology was not a viable potential competitor to the technology embodied in the [patentee’s] patents.” 

A copy of the opinion can be found here.

Attorney advertising materials.

These materials have been prepared by Winston & Strawn LLP for informational purposes only.  These materials do not constitute legal advice and cannot be relied upon by any taxpayer for the purpose of avoiding penalties imposed under the Internal Revenue Code.  Receipt of this information does not create an attorney-client relationship.   No reproduction or redistribution without written permission of Winston & Strawn LLP. 

Along with this briefing, a library of all the Winston & Strawn LLP briefings published to date can be accessed by visiting the Publications Library section of Winston & Strawn LLP’s Web site (www.winston.com).

© 2010 Winston & Strawn LLP