By Andrew Williams --
In a sequel of sorts to the hugely popular Streck, Inc. v. Research & Diagnostic Systems, Inc. (Fed. Cir. 2011), the Federal Circuit released Streck II (Streck, Inc. v. Research & Diagnostic Systems, Inc. (Fed. Cir. 2012)) earlier this month. Not to be upstaged by the original, this ambitious follow-up leaves the priority determination behind, and instead focuses on the infringement proceeding appeal. Notably, Streck II clocks in at over twice the length of its predecessor. However, if you have ever asked yourself whether a counterclaimant could maintain the full scope of a declaratory judgment challenge if a plaintiff narrows the scope of asserted claims early on in litigation, then Streck II could keep you on the edge of your seat. Spoiler alert -- the answer is "no."
The background and cast of characters was basically the same for both opinions. For those unfamiliar with the original Streck, the technology at issue in both cases was integrated controls for hematology analyzers. Prior to 1996, such instruments measured reticulocytes and white blood cells separately, because the various blood components would interfere with each other, causing error in counting or classifying. Such stand-alone controls using either true reticulocytes (also referred to as natural reticulocytes) or reticulocytes analogs were known before the filing dates of the patents-at-issue. As the instrument makers began attempting to develop an integrated analyzer that could measure the different blood components in the same sample, both Streck and Research & Diagnostic Systems (R&D) sought to create an integrated control. As we learned in Streck, one of the difficulties to overcome was the stability of the controls over extended periods of time. Streck obtained a patent to such controls, U.S. Patent No. 6,221,668, and sued R&D in the U.S. District Court for the District of Nebraska for infringement of three patents. Claim 1 of the '668 patent is representative:
1. A hematology control composition comprising:
a) a stabilized reticulocyte component; and
b) a fixed and stabilized white blood cell component capable of exhibiting a five-part differential.
The District Court construed the claims to encompass both true reticulocytes and reticulocyte analogs. Streck's inventor, however, only actually reduced his invention to practice with his previous developed reticulocyte analogs, while R&D's commercial product used true reticulocytes.
At this point, the plot of Streck II gets a bit convoluted. As previously mentioned, Streck filed its lawsuit in Nebraska. However, both parties agreed to be bound by the local patent rules of the United States District Court for the Northern District of California. As a result, Streck served a Disclosure of Asserted Claims and Preliminary Infringement Contentions shortly after the initial case management conference. In this disclosure, Streck narrowed the scope of asserted claims. R&D followed up with preliminary invalidity contentions narrowly drawn to the asserted claims, but later expanded the contentions to include all but one of the claims in the patents-at-issue. Streck further narrowed its asserted claims to ten, and then to nine, prior to the Court's Summary Judgment decision. On September 9, 2009, the Court held that Streck's patents satisfied the Written Description requirement with respect to integrated controls with true reticulocytes, and denied R&D's motion for summary judgment on enablement. The Court also dismissed the counterclaims with respect to Claim 3 of two of the patents, because there was "no reasonable apprehension of suit," and found that, as a matter of law, R&D infringed the asserted claims (and that there was evidence from which a jury could find willfulness). Subsequently, just before trial, the Court sided with Streck and excluded the evidence related to the validity of all unasserted claims, stating that the validity of these claims would not go to the jury. After an eight-day jury trial, the Court granted JMOL for Streck on enablement. The only issues submitted to the jury were priority, damages, and willfulness. The jury did not find R&D's infringement to be willful and awarded damages of 12.5%. As the priority issue was covered in Streck, it will not be addressed here. The procedural background concluded with the District Court entering an injunction against R&D.
Declaratory Judgment Jurisdiction over Counterclaims
The first issue on appeal was whether R&D could maintain invalidity counterclaims against claims that Streck was no longer asserting. Steck originally filed suit in June 2006 alleging infringement of all claims in the patents-in-suit, but within six months, it had narrowed the asserted claims to fifteen specific claims. R&D, in turn, responded with preliminary invalidity contentions against those fifteen claims, but expanded the scope of its invalidity contentions in the next two years to all but one claim of the patents-in-suit. Streck subsequently narrowed the asserted claims to ten, and then to nine. As a result, the District Court dismissed R&D's invalidity counterclaims against two claims because it had "no reasonable apprehension" it would face an infringement suit on any claim other than the claims asserted by Streck. Moreover, prior to trial, the Court excluded R&D's evidence with regard to the unasserted claims, because of these same jurisdictional concerns.
The Federal Circuit agreed with the District Court that there was no jurisdiction, even though it used the outdated "reasonable apprehension" test. As the Federal Circuit pointed out, even though MedImmune rejected strict reliance on the "reasonable apprehension of suit" test, it did not do away with the relevance of this test. The Federal Circuit looked favorably on a New Jersey District Court case as persuasive authority, Hoffman-La Roche Inc. v. Mylan Inc., No. 2:09cv1692, 2009 U.S. Dist. LEXIS 114784, at *17-18 (D.N.J. Dec. 9, 2009). In that case, like here, the patentee narrowed the scope of the asserted claims when it served infringement contentions. That court noted that jurisdiction exists on a claim-by-claim basis at every stage of the litigation, and that even though the plaintiff's decision to change the scope of the suit did not automatically divest the court of jurisdiction, the counterclaimant must show why jurisdiction continues to exist. Applying the same reasoning, the Federal Circuit found that "there was no evidence that R&D met its burden of showing a continuing case or controversy with respect to the unasserted claims." In fact, the Court noted that R&D relied too heavily on the District Court's use of the "reasonable apprehension" test, and pointed out that MedImmune doesn't stand for the proposition that jurisdiction automatically exists whenever a competitor wants to mount a validity challenge.
Interestingly, the Federal Circuit cited favorably to Streck's narrowing of the scope of the claims at the outset of the litigation, prior to any dispositive rulings. In fact, it appears that neither party cited to the preliminary infringement and invalidity contentions, but instead the Court itself identified the early nature of the narrowing of scope of the litigation. This begs the question, therefore, of when is it advisable to narrow the scope of the claims in an infringement suit? Should it be done as soon as possible, thereby possibly foreclosing the ability to assert relevant claims before fact discovery is completed (or perhaps has even begun)? Or can a patentee wait until the eve of filing of Summary Judgment motions? Of course, after MedImmune, courts must look to "all the circumstances," and therefore the answer will be fact specific. Nevertheless, it would be advisable to monitor the claims one is asserting in an infringement suit during all stages of the litigation, especially if it is desirable to move some of those claims out of harm's way, or if the validity of those claims is in such question that taking them to the jury could have prejudicial affect.
The second issue on appeal was whether Streck's patents satisfied the written description requirement of 35 U.S.C. § 112, ¶ 1. Specifically, R&D alleged that the patents failed to provide sufficient details to establish that Streck was in possession of a true reticulocyte integrated control. The test, according to Ariad Pharm., Inc. v. Eli Lilly & Co., 598 F.3d 1336 (Fed. Cir. 2010) (en banc), is whether the disclosure "conveys to those skilled in the art that the inventor had possession of the claimed subject matter as of the filing date." Id. at 1351. The Federal Circuit implicitly noted that there are generally two situations where written description can be found lacking: (1) when newly added claim language is not supported by the specification as filed, and (2) when patentees attempt to claim a broad genus without providing adequate support for enough species within that genus. The Court found that neither of these situations applied, because the patents-in-suit specifically referred to several types of true reticulocytes, i.e., several species, as possible embodiments of the claimed invention. And, even though it was more relevant to the enablement requirement, the Court did note that because analogs are designed to mimic true reticulocytes, and because stand-alone true reticulocytes were known in the art, it was not difficult to conclude that one skilled in the art would have recognized that the claimed integrated controls could be made with either true reticulocytes or analogs.
R&D did not appear to take its written description challenge very seriously. Indeed, the District Court noted that the R&D focused primarily on enablement, and the Federal Circuit argument centered almost exclusively on the enablement issue. Instead, R&D appeared to rely mainly on the testimony of a Streck inventor to establish a lack of written description. However, R&D apparently mischaracterized the testimony. The inventor did testified to the commercial practicalities of the use of true reticulocytes, but such evidence does not speak to the feasibility or viability of the use of true reticulocytes in a control. Instead, it merely reflects the inventor's personal preference. Also, R&D pointed to the inventor's difficulty in identifying support in the specification for true reticulocytes. However, he later clarified that the patent covers both kinds of reticulocytes, and cited to the language referenced above. Finally, R&D cited the lack of any reduction to practice by Streck of true reticulocytes. However, actual reduction to practice is not necessary because the filed specification constitutes a constructive reduction to practice. Therefore, such an allegation is without merit.
R&D's lack of enablement assertions appeared to have more credibility, but they also ultimately fell short. In fact, the Federal Circuit held that the evidence clearly supported a finding of enablement, and therefore met the exacting standard of taking this fact-laden inquiry away from the jury. The District Court had granted JMOL after the close of evidence but before the case went to the jury, and the Federal Circuit affirmed that decision.
Much like with the written description challenge, R&D alleged that the patents-in-suit do not enable true reticulocyte integrated controls. Of course, to satisfy the enablement requirement, the specification must enable one skilled in the art how to make and use the claimed invention without undue experimentation. And, even though the specification need not disclose what is well known in the art, this rule is not a substitute for a basic enabling disclosure.
The question in this case appeared to center around what the novel aspects of the invention were. R&D relied on Automotive Technologies Int'l, Inc. v. BMW of North America, Inc., 501 F.3d 1274 (Fed. Cir. 2007), which held that a patent that disclosed mechanical side-impact crash sensors for automobile airbags did not, without more, enable the use of electronic side-impact crash sensors. In that case, the Court determined that the electronic sensors were novel, and distinctly different than mechanical sensors. Moreover, the knowledge of one of skill in the art could not supply the missing information, especially when that missing information constituted the novel aspect of the invention. In contrast, in the present case, the novel aspect of the invention was the integrated reticulocyte control, and the use of true reticulocyte in the invention is virtually indistinguishable from analogs. Moreover, even though the burden was on R&D to establish lack of enablement by clear and convincing evidence, R&D failed to submit sufficient evidence to submit the case to a jury. R&D relied heavily on its expert, but the expert provided conclusory assertions which do not give rise to a genuine issue of fact. In fact, R&D's expert admitted on cross-examination that he had never been involved in developing controls. Finally, R&D pointed to the testimony of the Streck inventors that the quantity of experimentation to make and use a true reticulocyte integrated control would be high. However, this testimony was referring to the difficulties of using such a control prior to the patent disclosure.
Overbreadth of Injunction
After a quick flashback to Streck, in which the Court dismissed R&D's appeal of priority and evidentiary ruling as controlled by the outcome of the first case, Streck II concluded rather anticlimactically. R&D argued that the permanent injunction entered by the District Court was over broad because it prohibited R&D "from otherwise infringing the asserted claims of [the Patents-in-Suit] until the expiration of the last to expire of the Patents-in-Suit." Specifically, R&D wanted the injunction limited to the adjudicated products, and products not more than colorably different therefrom. However, the Federal Circuit noted that the injunction as a whole did specifically refer to the products at issue in the case. Therefore, because the injunction already contained the limitation sought, the Federal Circuit affirmed the permanent injunction entered by the District Court.
In conclusion, even though it had its slow points, we would give Streck II two thumbs up, and would recommend it to most patent practitioners, especially those embroiled in litigation, trying to determine whether it is advantageous to narrow the scope of asserted claims.
Streck, Inc. v. Research & Diagnostic Systems, Inc. (Fed. Cir. 2012)
Panel: Circuit Judges Newman, O'Malley, and Reyna
Opinion by Circuit Judge O'Malley