Patent Docs

Infringement - Contributory or Induced

February 22, 2017

Life Technologies Corp. v. Promega Corp. (2017)

Earlier today, in Life Technologies Corp. v. Promega Corp., the Supreme Court reversed a determination by the Federal Circuit that there are circumstances in which a party may be liable under § 271(f)(1) for supplying or causing to be supplied a single component for combination outside the United States, holding instead "that a single component does not constitute a substantial portion of the components that can give rise to liability under §271(f)(1)."

The Federal Circuit had earlier determined in Promega Corp. v. Life Technologies Corp. that substantial evidence supported a jury's finding that Life Technologies infringed U.S. Patent No. RE37,984 ("the Tautz patent") under 35 U.S.C. § 271(f)(1), and therefore had reversed the District Court's grant of judgment as a matter of law (JMOL) of noninfringement. The Tautz patent, which is owned by Max-Planck-Gesellschaft zur Förderung der Wissenschaften E.V. and exclusively licensed to Promega, claims a kit for testing at least one STR locus that contains: (1) a mixture of primers; (2) a polymerizing enzyme such as Taq polymerase; (3) nucleotides for forming replicated strands of DNA; (4) a buffer solution for the amplification; and (5) control DNA. Life Technologies manufactures genetic testing kits that provide components for carrying out a multiplex amplification of STR loci from DNA samples, wherein the kits contain (1) a primer mix; (2) Taq polymerase; (3) PCR reaction mix including nucleotides; (4) a buffer solution; and (5) control DNA.

In 2010, Promega sued Life Technologies for infringement of the Tautz patent (as well as four other patents owned by Promega), alleging that Life Technologies had sold kits that were not covered by the license agreement between the parties (the license agreement limited Life Technologies' use of the patents-in-suit to activities related to legal proceedings, i.e., live forensic investigations conducted by police officers). The parties moved for summary judgment on infringement and invalidity, with the District Court determining that Life Technologies' sales outside the license agreement's field of use were infringing. Following trial, the jury returned a verdict of willful infringement. Life Technologies then moved for JMOL and the District Court granted the motion, finding that Promega had failed to present sufficient evidence to sustain a jury verdict under § 271(f)(1), and vacated the finding of infringement.

On appeal, the Federal Circuit reversed the District Court's grant of JMOL of noninfringement. The panel was divided as to the finding of infringement under § 271(f)(1), but the divide centered on another aspect of the statute. With regard to the issue of whether infringement under § 271(f)(1) requires that at least two components be supplied from the U.S., the Federal Circuit held "that there are circumstances in which a party may be liable under § 271(f)(1) for supplying or causing to be supplied a single component for combination outside the United States," and "based on the facts of this particular case . . . conclude[d] that substantial evidence supports the jury's verdict that LifeTech is liable for infringement under § 271(f)(1) for shipping the Taq polymerase component of its accused genetic testing kits to its United Kingdom facility."

The Supreme Court granted certiorari to determine whether a party that supplies a single component of a multicomponent invention for manufacture abroad can be held liable for infringement under § 271(f)(1). As the Court pointed out in its opinion, Life Technologies manufactured all but one component of its kits in the United Kingdom -- manufacturing Taq polymerase in the United States and then shipping the Taq polymerase to its United Kingdom facility to be combined with the other four components of the kit.

The Court began by noting that § 271(f)(1) reads as follows (with emphasis added):

Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

According to the Court, "[t]he threshold determination to be made is whether §271(f)(2)'s requirement of 'a substantial portion' of the components of a patented invention refers to a quantitative or qualitative measurement." Life Technologies argued that § 271(f)(1) establishes a quantitative threshold, and Promega countered that a "substantial portion" of the components includes a single component if that component is sufficiently important to the invention.

In answering the threshold inquiry, the Court noted that the Patent Act does not define the term "substantial," and that the ordinary meaning of the term was of "little help," since "[a]ll agree the term is ambiguous and, taken in isolation, might refer to an important portion or to a large portion." However, when the Court looked at the context in which the term appears in the statute, that context pointed to a quantitative meaning. In particular, the Court indicated that the terms "all" and "portion" in the statute convey a quantitative meaning. The Court also noted that "there is nothing in the neighboring text to ground a qualitative interpretation."

The Court declined Promega's invitation to adopt a "case-specific approach" in which the factfinder would have to decipher whether the components at issue are a "substantial portion" under either a qualitative or quantitative test, stating that "[h]aving determined the phrase 'substantial portion' is ambiguous, our task is to resolve that ambiguity, not to compound it by tasking juries across the Nation with interpreting the meaning of the statute on an ad hoc basis." Moreover, the Court noted that:

[C]onsidering the qualitative importance of a component . . . might just as easily complicate the factfinder's review. Surely a great many components of an invention (if not every component) are important. Few inventions, including the one at issue here, would function at all without any one of their components. Indeed, Promega has not identified any component covered by the Tautz patent that would not satisfy Promega's "importance" litmus test. How are courts—or, for that matter, market participants attempting to avoid liability—to determine the relative importance of the components of an invention? Neither Promega nor the Federal Circuit offers an easy way to make this decision.

Having determined that the term "substantial portion" refers to a quantitative measurement, the Court next turned to the question of whether, as a matter of law, a single component can ever constitute a "substantial portion" so as to trigger liability under § 271(f)(1). In answering that question in the negative, the Court noted that § 271(f)(1) consistently refers to "components" in the plural, stating that "[t]ext specifying a substantial portion of 'components,' plural, indicates that multiple components constitute the substantial portion." The Court therefore held that "one component does not constitute 'all or a substantial portion' of a multicomponent invention under §271(f)(1)," adding that to resolve the question presented, the Court did not need to define how close to "all" of the components "a substantial portion" must be.

Having found that the phrase "substantial portion" in § 271(f)(1) has a quantitative, not a qualitative, meaning, and further, that § 271(f)(1) does not cover the supply of a single component of a multicomponent invention, the Court reversed the judgment of the Federal Circuit and remanded the case since only a single component of the patented invention at issue was supplied from the United States.

Life Technologies Corp. v. Promega Corp. (2017)
Opinion of the Court by Justice Sotomayor, joined by Justices Kennedy, Ginsburg, Breyer, and Kagan; joined as to all but Part II-C by Justices Thomas and Alito;
Opinion concurring in part and concurring in the judgment by Justice Alito, joined by Justice Thomas;
Chief Justice Roberts took no part in the decision of the case.

Posted at 11:59 PM in Infringement - Contributory or Induced, Supreme Court | Permalink | Comments (7)

January 30, 2017

Eli Lilly & Co. v. Teva Parenteral Medicines, Inc. (Fed. Cir. 2017)

By Kevin E. Noonan --

From the nadir of the Supreme Court's allegations that the Federal Circuit "fundamentally misunderstood" the law of inducing infringement in Limelight Networks, Inc. v. Akamai Technologies, Inc., the nation's specialized patent appellate court has crafted a two-prong test for assessing when the actions of more than a single actor amount to literal infringement sufficient to support a determination of inducement. Akamai Technologies, Inc. v. Limelight Networks, Inc. (Fed. Cir. 2015) (en banc).

The case came to the Court from ANDA litigation between Eli Lilly and Teva and other ANDA filers over infringement under 35 U.S.C. § 271(e)(2) of U.S. Patent No. 7,772,209. The claims were directed to methods for administering pemetrexed disodium (sold by Eli Lilly as Alimta^®) after pretreatment with folic acid and vitamin B12. Claims 1 and 12 are representative as set forth in the opinion:

1. A method of administering pemetrexed disodium to a patient in need thereof comprising administering an effective amount of folic acid and an effective amount of a methylmalonic acid lowering agent followed by administering an effective amount of pemetrexed disodium, wherein the methylmalonic acid lowering agent is selected from the group consisting of vitamin B12, hydroxycobalamin, cyano-10-chlorocobalamin, aquocobalamin perchlorate, aquo-10-cobalamin perchlorate, azidocobalamin, cobalamin, cyanoco- balamin, or chlorocobalamin.

12. An improved method for administering pemetrexed disodium to a patient in need of chemotherapeutic treatment, wherein the improvement comprises:
    a) administration of between about 350 μg and about 1000 μg of folic acid prior to the first administration of pemetrexed disodium;
    b) administration of about 500 μg to about 1500 μg of vitamin B12, prior to the first administration of pemetrexed disodium; and
    c) administration of pemetrexed disodium.

(Where the italicized limitations were specifically at issue.) Here, the patient practices the step of the claim involving administering folic acid (which is available as a pill), and the physician administers B12 and pemetrexed by injection. The question of whether the existence of two actors (patients and physicians) practicing the claims creates a divided infringement situation that would vitiate literal infringement was clearly contemplated throughout the litigation, during the course of which the Federal Circuit and Supreme Court were considering the question. That both actors performed their individual steps of the claimed method was not disputed, but its effects on infringement liability, and whether Teva could be liable for inducing infringement was central to the dispute between the parties.

As the litigation progressed, defendants conditionally stipulated to induced infringement subject to being able to litigate the issue if (as it turned out) the Supreme Court reversed the Federal Circuit's contemporaneous standard. The District Court proceeded on the invalidity issues and held Eli Lilly's claims not to be invalid on obviousness and obviousness-type double patenting grounds nor were indefinite. After the Supreme Court's Akamai decision, the parties relitigated the infringement issues. The District Court used the label as evidence of infringement, wherein under FDA regulations Teva's label comprising instruction for administration of the drug would be identical to Eli Lilly's label. Based on this determination, the District Court found defendants had induced infringement, and this appeal followed.

The Federal Circuit affirmed, in an opinion by Chief Judge Prost joined by Judges Newman and Dyk. The opinion recognized the Supreme Court's overriding teaching that induced infringement requires a finding that literal infringement had occurred. Moreover, inducement also requires an intent to induce, which requires that the alleged infringer "knew or should have known" that her actions would induce infringement. In order for more than one actor to practice the steps of a claimed method and for literal infringement to lie, the Supreme Court-approved standard is that either one of the actors works at the "direction or control" of the other actor, or the actors form a joint enterprise. With regard to the question of "direction or control," the panel set forth the revised Akamai standard operationalized as a two-prong test. The first prong of that test is whether one actor "'conditions participation in an activity or receipt of a benefit' upon anothers' performance of one or more steps of a patented method," and the second prong is whether that actor "'establishes the manner or timing of that performance,'" citing the Court's Akamai decision following remand from the Supreme Court (italics in opinion). The District Court held that the first prong was satisfied because folate administration was a precondition for the physician administering B12 and the drug, and that the second prong was satisfied because the physician prescribed the dose and administration schedule to the patient.

With regard to the District Court's decision on the first prong, the Federal Circuit held that this determination was supported by the evidence of record. Contrary to Teva's argument that reduction of toxicity was not conditioned by a patient taking folate, the opinion states that what was conditioned was whether the physician administered the drug to the patient (i.e., a physician would only administer the drug if a patient had taken the prescribed amount of folate at the proper schedule):

What is relevant is whether the physician sufficiently directs or controls the acts of the patients in such a manner as to condition participation in an activity or receipt of a benefit—in this case, treatment with pemetrexed in the manner that reduces toxicities—upon the performance of a step of the patented method and establishes the manner and timing of the performance [italics in opinion].

The panel also noted that the District Court's conclusions on this point were supported by the Physician Prescribing Information and Patient Information comprising the FDA-approved label as well as expert testimony (wherein both parties' experts agreed on the importance of folate pre-administration). Finally on this point, the panel stated that such "conditioning" did not require that a legal obligation be imposed on one of the parties or that the step comprise an "unavoidable technological prerequisite to participation."

With regard to the second prong, the District Court and the panel relied upon the product label. This information comports with the dosage amounts and frequencies encompassed by the asserted claims. Expert testimony supported the finding that it was the physician who prescribed folate (in administered amount and frequency) to the patient.

Taken as a whole, the panel found no reversible error in the District Court's factual determinations.

The panel then turned to whether Eli Lilly had established that defendants exhibited the requisite intent to induce infringement, which required evidence of specific intention and acts and not mere knowledge of the patent in suit. The District Court once more relied on the generic product label (identical to Eli Lilly's label). The District Court and the Federal Circuit rejected Teva's argument that the label was not sufficient to provide specific evidence of inducement, because it purportedly did not show how physicians (the direct infringer) do act rather than as they may act. The panel's reaction to that argument was that "[t]he question is not just whether [those] instructions describ[e] the infringing mode, . . . but whether the instructions teach an infringing use such that we are willing to infer from those instructions an affirmative intent to infringe the patent," citing Takeda Pharm. USA, Inc. v. West-Ward Pharm. Corp. and that "it is irrelevant that some users may ignore the warnings in the proposed label," citing AstraZeneca LP v. Apotex, Inc. Also relevant to the panel's decision was that the label (in both the Physician Prescribing Information and Patient Information) emphasized how important folate administration was for reducing toxicity associated with administration of the drug. This portion of the opinion concludes "[i]n sum, evidence that the product labeling that Defendants seek would inevitably lead some physicians to infringe establishes the requisite intent for inducement."

With regard to the invalidity issues, the opinion first considered Teva's indefiniteness contentions. The factual basis for these were that the term "vitamin B12" was indefinite, because there were various species of the vitamin (claimed as vitamin B12, hydroxycobalamin, cyano-10-chlorocobalamin, aquocobalamin perchlorate, aquo-10-cobalamin perchlorate, azidocobalamin, cobalamin, cyanocobalamin, or chlorocobalamin); the District Court found that the term meant cyanocobalamin based on expert testimony. The panel noted that it does not defer to this expert testimony because satisfaction of the statute is a question of law. But the opinion does note that the question of how the skilled worker would understand the term is a question of fact reviewable for clear error, and found no such error in the District Court's finding (a definition that was supported even by defendant's expert). Upon consideration of how the term was used in the claims, and despite some apparent inconsistency in claim language, the Federal Circuit agreed that the skilled worker would have understood the meaning of the term.

With regarding to obviousness, the panel referenced the District Court's "thorough opinion" that the prior art did not motivate the skilled worker to practice the claimed method, and specifically that the skilled artisan would not have been motivated to "(1) use folic acid pretreatment with pemetrexed; (2) use vitamin B12 pretreatment with pemetrexed; or (3) use the claimed doses and schedules of folic acid and vitamin B12 pretreatments with pemetrexed." The focus of these determinations was that the art did not show any correlation between pemetrexed toxicity and vitamin B12 deficiency (although there was evidence of a correlation with folate deficiency). Expert testimony from both sides established that there was no recognition in the art that vitamin B12 deficiencies were associated with cancer treatment with antifolate compounds. Nor was there evidence from the art that B12 would have been routinely administered (or that its administration schedules would have been routine) in cancer treatment. The panel made similar determinations in affirming the District Court's finding that the claims of the '209 patent were not invalid under the obviousness-type double patenting doctrine.

Eli Lilly benefited in this case by having prevailed at the District Court, in large part due to the burden of finding clear error to overcome the District Court's decision. But the opinion does set forth an affirmation of the Court's two-prong test for finding that more than one actor can perform the steps in a claimed method sufficient to satisfy the unitary standard for finding literal infringement.

Eli Lilly & Co. v. Teva Parenteral Medicines, Inc. (Fed. Cir. 2017)
Panel: Chief Judge Prost and Circuit Judges Newman and Dyk
Opinion by Chief Judge Prost

Posted at 11:16 PM in Definiteness, Double Patenting, Federal Circuit, Infringement - Contributory or Induced, Obviousness | Permalink | Comments (2)

December 05, 2016

Supreme Court Preview -- Life Technologies Corp. v. Promega Corp.

By Andrew Williams --

On Tuesday, December 6, the Supreme Court will hear oral arguments regarding the interpretation of 35 U.S.C. § 271(f)(1), with the pertinent section highlighted:

Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

The sole question that will be decided by the Supreme Court in the Life Technologies Corporation v. Promega Corporation case is:

Whether the Federal Circuit erred in holding that supplying a single, commodity component of a multi-component invention from the United States is an infringing act under 35 U.S.C.§ 271(f)(1), exposing the manufacturer to liability for all worldwide sales.

Because the statutory language also concerns "active inducement," and LifeTech supplied the component in question to itself, albeit outside the United States, the petitioner had also posed the question whether a single entity can actively induce itself. The Court, however, did not take up this issue. Interestingly, Chief Judge Prost had dissented-in-part from the Federal Circuit opinion, but only to this second issue regarding inducement (see "Promega Corp. v. Life Technologies Corp. (Fed. Cir. 2014)"). As such, her separate comments did not impact the Supreme Court's decision to hear this case.

The technology at issue centers on the existence of "short tandem repeats" ("STR") of DNA in the human genome that can be used create a DNA "fingerprint" unique to an individual. For example, the sequence ATT (adenine-thymine-thymine) can be differently repeated at a particular location depending on the individual. While no particular "allele" is sufficient to differentiate one person from all others, the analysis of multiple alleles can be. Therefore, STR profiling can be used in many fields, such as forensic science. The various loci can be amplified using the polymerase chain reaction ("PCR") to make detectable amounts of DNA. It is additionally beneficial to amplify more than one loci simultaneously in a reaction, which is referred to as "multiplexing." The patented technology concerns multiplexing PCR.

The patent that is at issue in this case is directed to a kit for use in such a multiplexing reaction, which contains (1) a mixture of primers; (2) a polymerizing enzyme such as Taq polymerase; (3) nucleotides; (4) a buffer solution; and (5) control DNA. LifeTech sells kits with all of these components. However, only the Taq polymerase is manufactured in the United States, and is subsequently shipped overseas to a facility in the United Kingdom for assembly. These kits are sold world-wide. The District Court ruled on summary judgement that LifeTech's sales of its STR kits for uses other than forensic investigations conducted by police officers fell outside of a license field-of-use. The damages calculation that went to the jury included both U.S. sales under 35 U.S.C. § 271(a) and kits made and sold outside the U.S. under 35 U.S.C. § 271(f)(1). The District Court subsequently granted LifeTech's JMOL motion, finding that Promega failed to present sufficient evidence to sustain the jury verdict under both of these statutory sections.

In considering the same question that is before the Supreme Court, the Federal Circuit held "that there are circumstances in which a party may be liable under 271(f)(1) for supplying or causing to be supplied a single component for combination outside the United States." Therefore, the Court concluded that there was substantial evidence for the jury's verdict. The Federal Circuit took the position that the second reference to "such components" in the statute references "the components of the patented invention," not that which much be supplied. Therefore, the dictionary definition of "substantial," which is "important" or "essential," and the definition of "portion," which is a "section or quantity within a larger thing; a part of a whole," can include a "single important or essential component . . . ." Moreover, the Court pointed out that the Dictionary Act, at 1 U.S.C. § 1, instructs that "words importing the plural [can] include the singular."

The Federal Circuit also addressed the previous Supreme Court case interpreting § 271(f)(1): Microsoft v. AT&T Corp., 550 U.S. 437 (2007). In that case, the exported product was a "master version" of software for an operating system that was copied and installed outside the United States. The Supreme Court held that abstract software code was not a "component" as referenced in the statute, and that copies made outside the United States were not "supplied" for the purposes of the infringement analysis under this section. The Federal Circuit pointed out that the Supreme Court was actually considering the export of a single "component" -- the master version. And, even though the Court held that such a master version was not a § 271(f)(1) component, it did not make any pronouncement that a single component could not satisfy this statutory section. In fact, the Federal Circuit went as far as to say that the Court could have found, or otherwise instructed, that infringement under this section requires more than one component. But the Supreme Court did not. Therefore, the Federal Circuit rested on its ordinary reading of the statute.

Before the Supreme Court on Tuesday, LifeTech is arguing that "a substantial portion of the components" cannot be satisfied by a single component. In making its argument, LifeTech also looked to the plain text, but focused on the proximity of the phrase "substantial portion" to the term "all," which necessitates a quantitative meaning. In other words, the argument goes, the statute is referring to the number of components supplied, not their subjective importance. Moreover, because § 271(f)(2) refers to infringement for exporting a single U.S. component that is especially made or adapted for infringement, subsection (1) must refer exclusively to multi-component infringement. LifeTech also pointed out that the Microsoft case warned against giving "§271(f) an expansive interpretation," because the presumption should be that United States patent law "governs domestically but does not rule the world." Finally, LifeTech pointed out that 271(f)(1) was enacted in response to the Supreme Court's decision in Deepsouth Packing Co. v. Laitram Corp., and was intended to prevent the circumvention of U.S. patent law by supplying disassembled parts, leaving only the trivial step of assembly outside of the borders. Because the Federal Circuit's interpretation would go beyond that goal, LifeTech asserted that the decision should be reversed.

Promega is arguing that the Federal Circuit was correct in its interpretation of the statute. First, Promega asserted that there is nothing in the statute that suggests that a single component cannot be very important to the overall invention. Therefore, the analysis should be both a quantitative and qualitative one, where consideration is given to both amount and importance. Promega characterized LifeTech's proffered interpretation as "a rigid, bright-line rule," likely in view of the Supreme Court's disdain for such rules. It also focused on the legislative history, but noted that Congress was more concerned was preventing U.S. manufacturers from evading U.S. patent law, and therefore was more focused on the "intent" of the infringer more than the quantity of components. Moreover, there is no danger of "unduly expansive liability for innocent U.S. suppliers of commodity components," because there is still "specific intent required to establish active inducement." Finally, Promega pointed out that the Microsoft case was inapposite because in that case, a "U.S. made-master was never actually used in an infringing device." In contrast, according to Promega, every kit in the present case is "powered" by a Taq polymerase made in the U.S. This case does not implicate the presumption against extraterritoriality, Promega asserted, because the conduct occurs here in the U.S.

Not surprisingly, there was amicus interest in this case, with positions on both sides of the issue. The United States government filed an amicus brief in support of petitioner LifeTech, as did the company Agilent Technologies, the Federation of German Industries (known as Bundesverband der Deutschen Industrie e.V.), and a collection of Intellectual Property Professors (although only five such professors attached their names to the brief). In contrast, the Wisconsin Alumni Research Foundation and the New York Intellectual Property Law Association filed amicus briefs in support of Promega. Finally, two intellectual property organizations, the IPO and the AIPLA, filed amicus briefs in support of neither party. Nevertheless, both of these organizations argued that the statute should be interpreted to allow a single component to result in liability under 271(f)(1). Therefore, even though these organizations did not support Promega, the outcomes they both advocated would benefit the respondent.

We will continue to report on this case as the Supreme Court considers the issue.

Posted at 11:59 PM in Infringement - Contributory or Induced, Supreme Court | Permalink | Comments (3)

September 20, 2016

LifeNet Health v. LifeCell Corp. (Fed. Cir. 2016)

By Kevin E. Noonan --

The complexities that can be attendant on defending against an infringement allegation, and the possibility that a straightforward path to non-infringement can be complicated by claim construction even for terms construed using their plain meaning, are illustrated in the Federal Circuit's opinion affirming a jury verdict of infringement in LifeNet Health v. LifeCell Corp.

The suit involved LifeNet's ("Net") allegation that LifeCell's ("Cell") sales of "[p]lasticized soft tissue grafts for transplant" for "medical, orthopedic, dental, and cosmetic surgery applications" infringed its U.S. Patent No. 6,569,200. These grafts provide an alternative to freeze drying the tissue for transplantation (which was conventional art practice); instead, the water in the tissue is replaced with "biocompatible plasticizers" including, inter alia, glycerol. Using the claimed grafts avoids rehydration from a freeze-dried state that raised problems in the art.

Claim 1 of the '200 patent is representative:

1. A plasticized soft tissue graft suitable for transplantation into a human, comprising:
    a cleaned soft tissue graft having an internal matrix; and
    one or more plasticizers contained in said internal matrix;
    said one or more plasticizers are not removed from said internal matrix of said plasticized soft tissue graft prior to transplantation into a human.

Relevant to the Court's decision, the italicized limitation in the claim was added during prosecution to overcome prior art (Cavallaro reference, U.S. Patent No. 5,718,012) that disclosed using plasticizers to strengthen collagen threads but required that the plasticizer be removed before use.

The specification of the '200 patent states that while the glycerol or other plasticizer can be removed prior to implantation the removal step isn't required. The physician has options:

(1) "direct implantation of the grafts without further processing following removal from the packaging";

(2) "implantation following a brief washing in sterile isotonic saline to remove any remaining traces of plasticizer associated with the immediate surfaces of the grafts"; or

(3) "implantation following an extended (approximately 1 hour) washing with sterile isotonic saline to remove as much plasticizer as possible."

Cell's accused infringing soft tissue grafts were preserved in a plasticizer ("Solution E") wherein the graft was soaked in saline for at least 2 minutes prior to use, a treatment that removes "significant amounts" of the plasticizers.

The District Court's claim construction was directed to the limitation (added during prosecution) that the plasticizers were "not removed" from the graft prior to use. Net argued that some, but not all, of the plasticizer could be removed, while Cell argued that none of the plasticizer could be removed if infringement would lie. According to the opinion, Cell argued that the term required that "no processing steps are taken, before transplantation into a human that result in any amount of the one or more plasticizers being taken out of the internal matrix of the plasticized soft tissue graft," while Net argued that the term meant the grafts were used "without complete replacement of the plasticizer or plasticizers in the internal matrix of the tissue graft prior to direct implantation into a human." The District Court construed the claim using the plain meaning of the term, that "not removed" means 'no plasticizers are removed prior to transplantation.'" To a jury, Cell presented evidence that "as much as 50% of the plasticizer in [its] products is removed during the [] saline rinse" in arguing its products did not infringe. Net countered that the graft comprises an internal matrix from which the plasticizer is not removed by Cell's rinse (as required by the claim and based on expert testimony) and thus the limitation is met and Cell's accused articles infringed. A jury decided that Cell infringed the asserted claims of the '200 patent, found Cell had not established its invalidity defenses, and awarded Net almost $34 million. Cell appealed.

The Federal Circuit affirmed, in an opinion by Chief Judge Prost, joined by Judges Reyna and Chen. Cell presented five arguments on appeal: 1) the jury (rather than the court) improperly resolved a dispute regarding the meaning of "not removed" in the claim; 2) no matter how the term is construed, Cell cannot be liable for direct infringement, because it is the physician or technician that prepares a graft for transplantation, not the company; 3) the claims are indefinite for reciting a "method of use" limitation in a claim to an apparatus, citing IPXL Holdings, LLC v. Amazon.com, Inc., 430 F.3d 1377 (Fed. Cir. 2005); 4) the District Court misconstrued the term "plasticized soft tissue graft" which, if properly construed, renders its products non-infringing; and 5) the claims are anticipated by U.S. Patent No. 4,357,274 or obvious over this reference and the knowledge of one having ordinary skill in the art.

Cell's claim construction argument regarding the meaning of the term "not removed" was that the legal dispute about the term's meaning was wrongly presented to the jury (insofar as the jury was required to determine the plain meaning of this term), citing O2 Micro International Ltd. v. Beyond Innovation Technology Co., 521 F.3d 1351 (Fed. Cir. 2008). The Federal Circuit held that Cell had not requested further construction at trial and thus had not properly raised an O2 Micro issue. The panel recognized that this term related to two types of removal: how much of the plasticizer was removed, and from where it was removed (i.e., the "degree" of removal versus the locus of removal at the "internal matrix" of the tissue). The opinion further recognized that Cell's argument on appeal was that the internal matrix was the same as the tissue graft, so that removal of the plasticizer from the "gaps and voids" of the tissue was the same as removal from the internal matrix. Unfortunately for Cell, the Federal Circuit found that Cell did not "timely request modification of the district court's claim construction" and, moreover, argued throughout that the issue was one of fact rather than being a claim construction question. On the merits, the Court noted (in a footnote) that the term was properly construed according to its plain meaning in light of disclosure in the specification, including that the graft could be briefly rinsed or washed for one hour prior to transplantation; presumably, these treatments also resulted in no removal of the plasticizer from the internal matrix. Finally, on this issue the Court rejected Cell's attacks on Net's experts' trial testimony and particularly purported contradictions contained therein. Accordingly, the Court held that there was substantial evidence supporting the jury's finding of infringement.

On the question of divided infringement or inducement of infringement, the panel held that "the non-removal limitation clarifies that the recited plasticizer has not been removed and, because the plasticizer is biocompatible, can remain in the internal matrix of the tissue graft during transplantation, i.e., it need not ever be removed." As a limitation related to characterizing properties of the graft, rather than reciting a method step, the practice of this element required no action by a third party, and the Court affirmed the jury's finding of literal infringement liability on this basis (and the District Court's refusal to grant JMOL).

With regard to the IPXL issue (that it is improper for a claim to recite "method of use" limitations in a claim to an apparatus), the Court's determination regarding the non-removal limitation on the divided infringement question (that it recited a property of the tissue graft and not an affirmative limitation regarding steps to remove the plasticizer from the graft) was dispositive: under this reading of challenged claims 1-4 there was no mixing of apparatus and method claims and thus the claims were not indefinite.

Cell's challenge to the District Court's construction of the term "plasticized soft tissue graft" was based on its assertion that in addition to interpreting the term to mean that the "water of hydration" in the tissue had been replaced by the plasticizer, the Court should have required that the graft was "'dehydrated' in the sense that the tissue can only have 'low residual moisture.'" The Federal Circuit agreed with Net's position that the term "dehydration" "merely means that some of the water has been replaced with plasticizer," consistent with the District Court's construction and based on specific disclosure in the specification.

Finally with regard to Cell's invalidity arguments, the panel found substantial evidence supporting the jury's finding that the '274 patent did not anticipate the '200 patent's claims. Specifically, based on conflicting expert testimony, the Court was persuaded that while the '200 patent disclosed methods for avoiding "significantly altering" the mechanical properties of the tissue graft, the methods disclosed in the '274 patent resulted in significant alternation of the mechanical properties of the tissue. "The ultimate issue on this record was a classic factual dispute that the jury was free to resolve in LifeNet's favor," according to the opinion, citing Kinetic Concepts, Inc. v. Smith & Nephew, Inc., 688 F.3d 1342, 1361 (Fed. Cir. 2012). Cell's obviousness arguments were similarly unpersuasive and the Federal Circuit upheld the District Court's denial of JMOL or a new trial on this issue.

LifeNet Health v. LifeCell Corp. (Fed. Cir. 2016)
Panel: Chief Judge Prost and Circuit Judges Reyna and Chen
Opinion by Chief Judge Prost

Posted at 11:42 PM in Claim Construction, Federal Circuit, Infringement - Contributory or Induced | Permalink | Comments (1)

January 10, 2016

September 01, 2015

Eli Lilly and Company v. Teva Parenteral Medicines, Inc. (S.D. Ind. 2015)

District Court Finds Lilly Patent Infringed Based on Inducement of Infringement by Single Actor

By Donald Zuhn --

Last week, in Eli Lilly and Company v. Teva Parenteral Medicines, Inc., Judge Tanya Walton Pratt of the U.S. District Court for the Southern District of Indiana determined that Eli Lilly and Company had shown by a preponderance of the evidence that U.S. Patent No. 7,772,209, owned by Lilly, would be infringed by the ANDA products for which Defendants Teva Parenteral Medicines, Inc.; Teva Pharmaceuticals USA, Inc.; APP Pharmaceuticals, LLC; Barr Laboratories, Inc.; and Pliva Hrvatska D.O.O. sought approval to market (opinion). The District Court indicated that its finding of infringement was "based upon inducement of infringement by a single actor, the physician administering pemetrexed disodium in accordance with the claimed methods" of the '209 patent.

Claims 1 and 12 of the '209 patent recite:

1. A method for administering pemetrexed disodium to a patient in need thereof comprising administering an effective amount of folic acid and an effective amount of a methylmalonic acid lowering agent followed by administering an effective amount of pemetrexed disodium, wherein the methylmalonic acid lowering agent is selected from the group consisting of vitamin B12, hydroxycobalamin, cyano-10-chlorocobalamin, aquocobalamin perchlorate, aquo-10-cobalamin perchlorate, azidocobalamin, cobalamin, cyanocobalamin, or chlorocobalamin.

12. An improved method for administering pemetrexed disodium to a patient in need of chemotherapeutic treatment, wherein the improvement comprises: a) administration of between about 350 μg and about 1000 μg of folic acid prior to the first administration of pemetrexed disodium; b) administration of about 500 μg to about 1500 μg of vitamin B12, prior to the first administration of pemetrexed disodium; and c) administration of pemetrexed disodium.

Claims 9, 10, 12, 15, 18, 19, and 21 of the '209 patent were asserted by Lilly with respect to Defendants' ANDA products. Claims 9 and 10 depend indirectly from claim 1 and claims 15, 18, 19, and 21 depend indirectly or directly from claim 12.

The District Court noted that the '209 patent covers the method of administering a chemotherapy drug, pemetrexed disodium, with vitamins, which Lilly markets under the trade name ALIMTA®. The Court also noted that Defendants' product labeling for their proposed generic versions of ALIMTA® instructs physicians to follow exactly the claimed regimen, since Defendants' ANDA products will be required to be distributed with identical labeling as that for ALITMA®. Experts for both Lilly and the Defendants agreed that following the labels, physicians would administer vitamin B12 by injection and administer pemetrexed disodium by infusion, but that patients, at the instruction of the physician, would obtain and take the folic acid. Thus, the issue at trial was whether the steps of the claimed methods could be attributed to a single actor, the physician, thus supporting a finding that Defendants would induce infringement of the asserted claims.

In a separate trial on validity, the Defendants had failed to show by clear and convincing evidence that the asserted claims were invalid. Although the Defendants had appealed that ruling to the Federal Circuit, both parties jointly moved to remand the appeal in order to litigate the issue of infringement in light of the Supreme Court's decision in Limelight Networks, Inc. v. Akamai Techs., Inc., in which the Supreme Court reversed the Federal Circuit's decision, and remanded the case to the Federal Circuit. In an en banc per curiam opinion, the Federal Circuit set forth the law of divided infringement under 35 U.S.C. § 271(a). The District Court noted that "for purposes of this case, the Court must apply this most current articulation of the law of divided infringement as stated by the Federal Circuit in its most recent ruling."

In finding for Lilly, the District Court observed that "[a]lthough the instant case involves the administration of a medical treatment, the factual circumstances are sufficiently analogous to those in Akamai to support a finding of direct infringement by physicians under § 271(a), and thus inducement of infringement by Defendants under § 271(b), under the legal standard recently set forth by the Federal Circuit." The Court was not persuaded by the Defendants' argument that the actions of the patient in taking folic acid prior to pemetrexed treatment cannot be attributed to the physician because the physician does not physically place the folic acid into the patients' mouth, and because patients are instructed to obtain folic acid, either by prescription or over the counter, and take it on their own. According to the Court, whether patients actually take the folic acid was irrelevant to the issue of infringement, and "the only relevant question is whether the actions of the patient in taking folic acid as instructed may be attributable to the physician as a single actor." With respect to this question, the Court pointed out that "[t]he physician, based upon the patented method, directs the manner and timing of the patient’s ingestion of folic acid -- 400 to 1000 μg of folic acid for at least five days out of the seven days prior to and during pemetrexed administration -- and the patient is required to do so to receive the full benefit of the treatment." The Court therefore concluded that:

Lilly has shown, by a preponderance of the evidence that, in accordance with Defendants' proposed labeling, the physician directs or controls the patient's administration of folic acid such that the performance of all the claimed steps, including the administration of folic acid, can be attributed to a single person, i.e. the physician. The evidence showed that physicians specify both the "manner and timing" in detail, including prescribing an exact dose of folic acid and directing that it be ingested daily.

Posted at 11:59 PM in District Court, Infringement - Contributory or Induced | Permalink | Comments (0)

August 23, 2015

Standard Essential Patents Unenforceable on Theory of Indirect Infringement

By Joseph Herndon --

A recent decision by the Federal Circuit in JVC Kenwood Corp. v. Nero, Inc., decided August 17, 2015, involves nuanced details of standard-essential patents, but arrived at a common sense result: either the patents at issue are standard-essential and thus licensed by defendant, or plaintiff cannot solely rely on the licensed technology standards to show infringement.

Here, JVC Kenwood Corporation ("JVC") sued Nero, Inc. and Arcsoft, Inc. for contributory and induced infringement ("indirect infringement") of certain JVC patents directed to various uses of DVD and Blu-ray optical discs. The charge of indirect infringement is based on Nero's sale of software to end users of DVD and Blu-ray discs, who allegedly directly infringe the JVC patents.

Patents at Issue and Infringement Allegations

There are six JVC Patents are at issue, directed to aspects of optical discs and specific structures, methods, or systems used with optical discs such as "jump reproduction" -- e.g., fast-forwarding, fast-rewinding, etc., methods of recording moving picture data on a recording medium (i.e., burning data to DVDs and Blu-Ray discs), and methods of controlling whether certain kinds of content, such as a "R" rated movie on a DVD, should be played according to preconditions (i.e., implementation of parental controls) (see, e.g., U.S. Patent No. 6,522,692).

The record describes two licensing pools for optical disc technology including the DVD Patent Licensing Group (also called DVD6C), and One Blue LLC for Blu-ray technology. JVC is a member of both groups, and the Patents in suit are included in both pools, and thus, are considered standard-essential patents for this technology.

For the DVD6C pool, the DVD6C license for DVD Patents "extends only to the structure, features and functions of a DVD Product used to practice those DVD Standard Specifications or +R/+RW Standard Specifications applicable to that DVD Product and for which the DVD Patents are Essential." The DVD Standard Specifications are a series of documents setting forth the technical qualifications for standards-compliant products. They are published by the DVD Forum, an international association tasked with defining the DVD Specifications.

The One Blue patent licensing arrangement is similar. One-Blue licenses can be obtained for specific categories of Blu-ray products, and "applies only to the extent the structure, features and functions of a BD Registered Product are used to practice" the applicable standards.

Some of JVC's infringement contentions include that when end-users use Nero software with blank optical discs to record moving picture data, they directly infringe by practicing a specified "method of recording moving picture data on a recording medium," of one of the JVC patents. JVC also alleged that "when the end-user then uses Nero software to reproduce (playback) the moving picture data and to fast forward (or fast reverse) through the content, the end-user directly infringes" claims of the JVC patents. Still further, JVC alleged that when an end-user uses Nero software to perform the parental/regional control functions as recited in the claims, the end-user directly infringes claims of the JVC patents.

For all six standard-essential JVC Patents, JVC alleged that since Nero's software customers are direct infringers, Nero is liable for induced or contributory infringement as provider of the software.

JVC attempted to prove indirect infringement by showing that Nero is a licensed member of the DVD Format/Logo Licensing Corporation ("DVD FLLC"), the licensing agent for the DVD Forum, which is responsible for licensing the Format Books setting forth the DVD standards specifications and the DVD logo. JVC stated that Nero is bound by the terms of the DVD FLLC license agreement, which requires all products manufactured or sold by the licensee to comply with the standards set forth in the Format Books. JVC's theory of infringement is based on a standards-compliance theory of infringement, in that, since Nero's software necessarily complies with the standards specifications, use of Nero's software by end users for the purposes described in any of the Patents (which are standards-compliant), directly infringes the relevant Patent.

District Court Result

The District Court held that direct infringement of the patented systems, methods, and apparatuses, as alleged by JVC, is negated by the "extensive licensing program, both as part of the DVD6C and One Blue patent pools as well as through JVC's individual licensing program." The District Court generally observed that licensees cannot be infringers.

The District Court held that JVC is "barred from asserting claims of direct infringement against end users for use of Nero software with DVD and Blu-ray optical discs made or sold by a party whose products have been expressly released from claims of infringement by JVC with regard to the Patents." The District Court also held that, absent direct infringement, Nero cannot be liable for indirect infringement.

The District Court found that because Nero has shown an extensive licensing program, both as part of the DVD6C and One Blue patent pools as well as through JVC's individual licensing program, there cannot be infringement without specific allegations and evidence showing use of unlicensed optical discs.

Federal Circuit Result

JVC appealed and argued that licensees to the DVD6C pool only receive a license to those patents related to particular products, selected by the licensee, which "practice the DVD Standard Specifications" applicable to the licensee's products, citing the DVD6C License Agreement. Thus, JVC tried to argue that Nero's license, as a member of DVD FLLC, varied from the standards-essential patent license.

The Federal Circuit shot down JVC's arguments, and noted that, based on the proffered evidence of infringement, summary judgment of non-infringement was properly granted. JVC cited no "specific allegations and evidence" of any unlicensed discs.

The Federal Circuit thus affirmed the District Court's ruling, and further stated that on JVC's premise that these Patents are essential and are directly infringed by users of Nero software, it was JVC's burden to proffer at least plausible evidence in support of its position that unlicensed optical discs were in use. JVC offered no evidence of specific unlicensed discs.

The Federal Circuit noted that JVC cannot have it both ways -- either the Patent is essential and licensed or JVC cannot solely rely on compliance with the standards to show infringement as it has chosen to do.

While JVC may have slipped up by overlooking evidentiary procedures, or possibly was unable to prove that any unlicensed discs exist, the result here seems to come out as common sense (i.e., licensed patents cannot be infringed). This decision is further important to provide support for the notion that such licensed patents also cannot be indirectly infringed. While the result is not so broad, it does help support companies who have obtained licenses from later attacks of indirect infringement via use by end users. Downstream assertion of standard-essential patents, or two bites at the apple for patent holders (a first against companies as licensees and a second against the companies as indirect infringers) is not likely to be allowed by the Federal Circuit.

Patent Exhaustion

An alternative holding was advanced by the District Court, however, regarding patent exhaustion. The District Court applied Quanta and stated that "here, [JVC] has suggested no reasonable use for the [licensed DVD and Blu-ray optical discs] other than . . . practice[ing] the [JVC] Patents."

The Federal Circuit declined to opine directly on this issue for a few reasons. Notably, the Federal Circuit found that the District Court clearly and effectively determined that infringement had not been shown on JVC's theory and argument of the case, and thus, any further holding of patent exhaustion would have been redundant for purposes of assertion of the patents. In addition, the Federal Circuit found that the "sketchy record, contradictory arguments, and undeveloped facts before us" did not enable them to expand the theory of patent exhaustion to reach this case. Thus, with facts material to the issue of patent exhaustion being insufficiently developed to warrant summary judgment on that alternative ground, the District Court's ruling with respect to patent exhaustion was vacated.

It was further noted that in arguing that the District Court improperly applied the criteria of patent exhaustion, JVC also negated its own theory of infringement (e.g., if the Patents represent a "substantial embodiment" of the optical discs as sold -- as JVC argued in support of infringement -- then the Patents are exhausted on sale of the discs). This contradiction, and lack of details in evidence led the Federal Circuit to punt on the issue of patent exhaustion.

JVC Kenwood Corp. v. Nero, Inc. (Fed. Cir. 2015)
Panel: Circuit Judges newman, Dyk, and Reyna
Opinion by Circuit Judge Newman

Posted at 09:55 PM in Federal Circuit, Infringement - Contributory or Induced, Patent Exhaustion | Permalink | Comments (0)

August 13, 2015

Federal Circuit Delivers En Banc Opinion in Akamai v. Limelight

By Kevin E. Noonan & Michael Borella --

The Federal Circuit handed down a unanimous en banc decision today regarding the interplay between literal infringement and induced infringement in Akamai Technologies Inc. v. Limelight Networks, Inc. On remand from a disapproving reversal by the Supreme Court, the en banc court took notice of the "opportunity" provided in this case to "revisit the § 271(a) question" in view of the High Court's opinion that there was "the possibility that [the Federal Circuit] erred by too narrowly circumscribing the scope of § 271(a)" in its earlier opinion. Limelight Networks, Inc. v. Akamai Techs., Inc., 134 S. Ct. 2111, 2119, 2120 (2014). The per curiam opinion announces that the Court now "unanimously set forth the law of divided infringement under 35 U.S.C. § 271(a)" and that, in this case there was substantial evidence to support the jury finding that Limelight directly infringed U.S. Patent No. 6,108,703. Accordingly, the Federal Circuit reversed the District Court's grant of Limelight's motion for judgment of non-infringement as a matter of law.

To recap, the case arose in 2006, when Akamai sued Limelight in district court alleging infringement of U.S. Patent No. 6,108,703. The '703 patent is assigned to the Massachusetts Institute of Technology ("MIT") and is exclusively licensed to Akamai.

Claim 34 of the '703 patent recites:

A content delivery method, comprising:
    distributing a set of page objects across a network of content servers managed by a domain other than a content provider domain, wherein the network of content servers are organized into a set of regions;
    for a given page normally served from the content provider domain, tagging at least some of the embedded objects of the page so that requests for the objects resolve to the domain instead of the content provider domain;
    in response to a client request for an embedded object of the page:
    resolving the client request as a function of a location of the client machine making the request and current Internet traffic conditions to identify a given region; and
    returning to the client an IP address of a given one of the content servers within the given region that is likely to host the embedded object and that is not overloaded. [Emphasis added]

The claimed invention is directed to delivering electronic data using a content delivery network (CDN). It purports to facilitate faster delivery of the data by separating the content of a website onto multiple servers. The content that requires greater network capacity (such as photos and videos) can be assigned to servers ("tagged") that provide this content at faster speeds. The remaining content can be provided by non-specialized servers. Other independent claims further recited a step of serving the embedded object from one of the content servers.

Limelight operates a CDN, and content providers are its customers. Limelight carries out three of the four claimed steps (the distributing, resolving, and returning steps), but did not tag components of its customers' websites -- instead, Limelight contractually required its customers to do their own tagging, if those customers wanted to exploit the faster servers. The relevant language of the contract stated "Customer [i.e., content provider] shall be responsible for identifying via the then current [Limelight] process all [URLs] of the Customer Content to enable such Customer Content to be delivered by [Limelight]," and "Customer shall provide [Limelight] with all cooperation and information necessary for [Limelight] to implement the [Content Delivery Service]."

At trial, the jury found that Limelight and its customers jointly and directly infringed '703 patent under 35 U.S.C. § 271(a), and awarded $40 million in damages. Following this verdict, the Federal Circuit decided Muniauction, Inc. v. Thomson Corp. In Muniauction, the Court held that direct infringement of a claimed method requires that a single entity perform every step of the claim (the "single entity rule"). But, this requirement is satisfied if steps are performed by multiple parties provided that a single defendant exercises "control or direction" over entire process. Thus, neither party is liable for infringement if they perform all of the steps, but merely engage in an arms-length relationship to do so.

Limelight moved for judgment of non-infringement as a matter of law (JMOL) in view of Muniauction, and the District Court granted the motion, holding that because (i) no single entity performed all of the claimed steps, and (ii) the contractual relationship between Limelight and its customers did not rise to the level of "control or direction" there was no liability. On appeal, a Federal Circuit panel affirmed, but the Court reheard the case en banc, reversed, and remanded the case for further proceedings. Particularly, the en banc majority reasoned that Limelight and its customers did not directly infringe, but "the evidence could support a judgment in its favor on a theory of induced infringement [under 35 U.S.C. § 271(b)]" because "inducement does not require that the induced party be an agent of the inducer or be acting under the inducer's direction or control." The Court, however, also stated that "here can be no indirect infringement without direct infringement."

In a June 2014 appeal, the Supreme Court took issue with this apparent contradiction, and held that a defendant is not liable for inducing infringement under 35 U.S.C. § 271(b) when no one party has directly infringed the patent under § 271(a). The High Court reversed the Federal Circuit finding that Limelight had infringed the '703 patent and sent the case back to the Federal Circuit for reconsideration.

On remand, a Federal Circuit panel considered whether Limelight has infringed under § 271(a). Judge Linn authored the opinion of the court, joined by Chief Judge Prost with Judge Moore dissenting. According to the majority, Limelight was not liable for direct infringement "because Limelight . . . did not perform all of the steps of the asserted method claims . . . and because the record contains no basis on which to impose liability on Limelight for the actions of its customers who carried out the other steps, Limelight has not directly infringed the '703 patent under § 271(a)." The majority confirmed that "direct infringement liability of a method claim under 35 U.S.C. § 271(a) exists when all of the steps of the claim are performed by or attributed to a single entity -- as would be the case, for example, in a principal-agent relationship, in a contractual arrangement, or in a joint enterprise." Here, there was no liability "[b]ecause this case involves neither agency nor contract nor joint enterprise" and "[e]ncouraging or instructing others to perform an act is not the same as performing the act oneself."

In dissent, Judge Moore disagreed. She believed that "§ 271(a) includes joint tortfeasor liability." Characterizing the majority's rule as creating "a gaping hole in what for centuries has been recognized as an actionable form of infringement," she opined that the single entity rule "is a recent judicial creation inconsistent with statute, common law, and common sense."

The Court reheard the appeal en banc and arrived at the decision handed down today. In its opinion, the per curiam court set out the basics, that only if a single tortfeasor performed all the steps in a claimed method would direct infringement lie and liability be found. However, the Court recognized that situations (like the one at bar) could arise where no one tortfeasor can be fairly said to directly infringe by practicing all the steps of a claimed method. However, according to the opinion, "an entity [is] responsible for others' performance of method steps in two sets of circumstances: (1) where that entity directs or controls others' performance, and (2) where the actors form a joint enterprise." This holding leads to an assessment of whether a single entity "directs or controls the acts of another."

Turning to vicarious liability law for enlightenment (while recognizing that the circumstances under which vicarious liability arises are not entirely analogous to the question before the court), the opinion states that infringement liability can arise when the infringing acts are those of an agent or the subject of a contract for their performance. Applying these principles to the Limelight situation, the Court held that joint infringement may apply "when an alleged infringer conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner and timing of that performance," relying on Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930 (2005). And this question, according to the opinion, is one of fact (i.e., for a jury) that is to be reviewed under the "substantial evidence" standard.

The opinion also considers the other situation where direct infringement can be found through the actions of two or more actors who have formed a "joint enterprise." Under these circumstances, each joint tortfeasor can be held responsible for the actions of the other "as if each is a single actor." Such a joint enterprise is found only on proof of four elements:

(1) an agreement, express or implied, among the members of the group;
(2) a common purpose to be carried out by the group;
(3) a community of pecuniary interest in that purpose, among the members; and
(4) an equal right to a voice in the direction of the enterprise, which gives an equal right of control.

(citing the Restatement (Second) of Torts, § 491). This is also a question of fact for the jury and subject to review using the substantial evidence standard.

The Court's synthesis of these legal principles is directed to the question of "whether all method steps can be attributed to a single entity" and is "not limited solely to principal-agent relationships, contractual arrangements, and joint enterprise, as the vacated panel decision held." This approach is also consistent with the Supreme Court's admonishments in its opinion regarding the extent to which the Federal Circuit did and did not understand what constituted literal infringement under § 271(a). But the en banc court also acknowledged "other factual scenarios [that] may arise warranting attributing others' performance of method steps to a single actor," consistent with the fact-based nature of the inquiry.

Applying these principles to the case before the Court, the en banc opinion held that "[t]he jury heard substantial evidence from which it could find that Limelight directs or controls its customers' performance of each remaining method step, such that all steps of the method are attributable to Limelight." This control was found by the panel in Limelight's conditions imposed on its customers to perform certain steps (the "tagging" and "serving" steps) of the claimed method under conditions where Limelight determined the "manner or timing" of such performance. These conditions include Limelight's requirement that its customers sign a "standard contract" containing the requirement for tagging and serving content. After discussing the content of these contractual provisions, the Court concluded "if Limelight's customers wish to use Limelight's product, they must tag and serve content. Accordingly, substantial evidence indicates that Limelight conditions customers' use of its content delivery network upon its customers' performance of the tagging and serving method steps."

With regard to the "manner and timing" question, the Court held that there was substantial evidence that Limelight was in control of that, too. This evidence was found in Limelight's "welcome letter" that instructed each customer how to use Limelight's services. These instructions included "step-by-step" instructions on how to tag content, under circumstances where failure to follow "these precise steps" will make Limelight's services unavailable. Further, "Limelight's engineers assist with installation and perform quality assurance testing [and] remain available if the customer experiences any problems."

Taking these (and other facts) into consideration, the en banc court held that "Limelight's customers do not merely take Limelight's guidance and act independently on their own. Rather, Limelight establishes the manner and timing of its customers' performance so that customers can only avail themselves of the service upon their performance of the method steps."

This opinion signals a move away from the restrictive Muniauction joint infringement framework to something that resembles a "totality of the circumstances" test. Arguably, after today, joint infringement will be able to be established in more scenarios. But the burden of doing so may be higher, as a multitude of factors may need to be considered.

This is not the end of the line for the parties, however. As the opinion notes, because there are remaining issues in both the appeal and cross-appeal, the matter will be once more before the panel. Perhaps more troubling for Akamai, however, is the following language from the Supreme Court's 2014 opinion:

[T]here has simply been no infringement of the method [of the '703 patent], because the performance of all the patent's steps is not attributable to any one person.

[W]here there has been no direct infringement, there can be no inducement of infringement under §271(b).

[T]he reason Limelight could not have induced infringement under §271(b) is not that no third party is liable for direct infringement; the problem, instead, is that no direct infringement was committed [emphasis in opinion].

These statements suggest that, insofar as the Court considered the issue of direct infringement, the Justices had decided it did not arise from the behavior relied upon by the en banc court in arriving at its decision today. Which suggests that another trip back to the Supreme Court may be in the offing.

Akamai Technologies, Inc. v. Limelight Networks, Inc. (Fed. Cir. 2015)
Before Chief Judge Prost and Circuit Judges Newman, Lourie, Linn, Dyk, Moore, O'Malley, Reyna, Wallach, and Hughes
Per curiam opinion

Posted at 11:54 PM in Federal Circuit, Infringement - Contributory or Induced, Infringement - Literal or DOE | Permalink | Comments (8)

June 21, 2015

Akamai Technologies, Inc. v. Limelight Networks, Inc. (Fed. Cir. 2015)

By Diego F. Freire and Michael Borella --

1. Background

In 2006, Akamai Technologies ("Akamai") sued Limelight Networks, Inc. ("Limelight") in the U.S. District Court for the District of Massachusetts, alleging infringement of U.S. Patent No. 6,108,703. The '703 patent is assigned to the Massachusetts Institute of Technology ("MIT") and is exclusively licensed to Akamai.

Claim 34 of the '703 patent recites:

A content delivery method, comprising:
    distributing a set of page objects across a network of content servers managed by a domain other than a content provider domain, wherein the network of content servers are organized into a set of regions;
    for a given page normally served from the content provider domain, tagging at least some of the embedded objects of the page so that requests for the objects resolve to the domain instead of the content provider domain;
    in response to a client request for an embedded object of the pagel;
    resolving the client request as a function of a location of the client machine making the request and current Internet traffic conditions to identify a given region; and
    returning to the client an IP address of a given one of the content servers within the given region that is likely to host the embedded object and that is not overloaded. [Emphasis added.]

Limelight operates a CDN, and content providers are its customers. Limelight carries out three of the four claimed steps (the distributing, resolving, and returning), but did not tag components of its customers' websites -- instead, Limelight contractually required its customers to do their own tagging, if those customers wanted to exploit the faster servers. The relevant language of the contract stated "Customer [i.e., content provider] shall be responsible for identifying via the then current [Limelight] process all [URLs] of the Customer Content to enable such Customer Content to be delivered by [Limelight]," and "Customer shall provide [Limelight] with all cooperation and information necessary for [Limelight] to implement the [Content Delivery Service]."

Limelight moved for judgment of non-infringement as a matter of law (JMOL) in view of Muniauction, and the District Court granted the motion, holding that because (i) no single entity performed all of the claimed steps, and (ii) the contractual relationship between Limelight and its customers did not rise to the level of "control or direction" there was no liability. On appeal, a Federal Circuit panel affirmed, but the en banc Court heard the case, reversed, and remanded the case for further proceedings. Particularly, the en banc majority reasoned that Limelight and its customers did not directly infringe, but "the evidence could support a judgment in its favor on a theory of induced infringement [under 35 U.S.C. § 271(b)]" because "inducement does not require that the induced party be an agent of the inducer or be acting under the inducer's direction or control." The Court, however, also stated that "there can be no indirect infringement without direct infringement."

In a June 2014 appeal, the Supreme Court took issue with this apparent contradiction, and held that a defendant is not liable for inducing infringement under 35 U.S.C. § 271(b) when no one party has directly infringed the patent under § 271(a) (see "Limelight Networks, Inc. v. Akamai Technologies, Inc. (2014)"). Thus, the high court reversed the Federal Circuit finding that Limelight had infringed the '703 patent. On remand, the Federal Circuit considered whether Limelight has infringed under § 271(a). Judge Linn authored the opinion of the court, and was joined by Chief Judge Prost. Judge Moore dissented.

2. The Outcome

Ultimately, the majority ruled that "because Limelight . . . did not perform all of the steps of the asserted method claims . . . and because the record contains no basis on which to impose liability on Limelight for the actions of its customers who carried out the other steps, Limelight has not directly infringed the '703 patent under § 271(a)." The majority confirmed that "direct infringement liability of a method claim under 35 U.S.C. § 271(a) exists when all of the steps of the claim are performed by or attributed to a single entity -- as would be the case, for example, in a principal-agent relationship, in a contractual arrangement, or in a joint enterprise." Here, there was no liability "[b]ecause this case involves neither agency nor contract nor joint enterprise."

In dissent, Judge Moore disagreed. She believes that "§ 271(a) includes joint tortfeasor liability." Characterizing the majority's rule as creating "a gaping hole in what for centuries has been recognized as an actionable form of infringement," she opined that the single entity rule "is a recent judicial creation inconsistent with statute, common law, and common sense."

Instead, the majority found that "[e]ncouraging or instructing others to perform an act is not the same as performing the act oneself and does not result in direct infringement [as] § 271 has separate subsections addressing induced and contributory infringement." In coming to this conclusion, the majority relied heavily on the structure of § 271, noting that "[w]hen a party participates in or encourages infringement but does not directly infringe a patent, the normal recourse under the law is for the court to apply the standards for liability under indirect infringement." But, "indirect infringement requires, as a predicate, a finding that some party is directly liable for the entire act of direct infringement."

Akamai attempted to argue that "an accused infringer 'directs or controls' a third party if the accused infringer goes beyond loosely providing instructions and specifically tells a third party the step or steps to perform." The majority disagreed based on the organization and legislative history of the statute. Notably, "§ 271(a) includes only the principles of vicarious liability, as embodied in the single entity rule." Despite being presented with "numerous conflicting theories of joint liability that existed in the common law prior to 1952, Congress enacted specific rules for inducement and contributory liability in § 271(b) and (c), respectively." The majority also explained its disagreement with the dissent's argument -- "[w]hile the dissent believes this leaves a 'gaping hole,' it is not our position to legislate or contravene Congress' choice -- right or wrong -- by importing other theories of joint liability into § 271(a)." Particularly, "the dissent advocates holding a customer jointly and severally liable for patent infringement based on its performance of a single step of a claimed method, even when it has no knowledge of the patent."

3. The Majority's Reasoning

The majority carried out its substantive analysis of the case in three steps. First, in reviewing the statutory scheme of § 271, the majority pointed out that patent infringement is not a creation of common law but a tort defined by statute. While § 271(a) is "a declaration of what constitutes infringement," subsections (b) and (c) codify the doctrines of inducement and contributory infringement respectively. The Court states that "in this way, Congress carefully crafted subsection (b) and (c) to expressly define the only ways in which individuals not completing an infringing act under § 271(a) could nevertheless be liable." And "[t]he fact that Congress chose to impose some forms of secondary liability, but not others, indicates a deliberate congressional choice with which the courts should not interfere."

The majority then addressed the dissent's argument (which was also promulgated by Akamai) that the word "whoever" in § 271(a) is plural and therefore undermines the single entity rule. In the majority's view, despite "whoever" being plural, more than one entity can be independently liable for direct patent infringement if each entity practices every step of the claim. Furthermore, interpreting § 271(a) to include actors who do not independently infringe would make § 271(b) and (c) redundant. In the majority's view, such a construction contravenes the canon against surplusage in statutes.

Second, the majority analyzed divided infringement case law, which is rooted in traditional principles of vicarious liability. This case law sets forth the single entity rule and that "multiple actors could together infringe a patent only if one controlled the other(s)." Particularly, "when a contract mandates the performance of all steps of a claimed method, each party to the contract is responsible for the method steps for which it bargained . . . [h]owever, this type of contractual arrangement will typically not be present in an arms-length seller-customer relationship." Still, "the concerns over a party avoiding infringement by arms-length cooperation can usually be offset by proper claim drafting [because] a patentee can usually structure a claim to capture infringement by a single entity."

Third, the majority found errors in the notion of importing joint tortfeasor liability into § 271(a). It acknowledged that "liability exists under traditional principles of vicarious liability, such as where a mastermind directs or controls another to perform all steps of a claimed method." But, the majority indicated that the dissent departed from the common law limits on joint tortfeasor liability in order to import this law into § 271(a). Particularly, "actors whose innocent actions coordinate to cause harm generally are not subject to liability at common law," but would be under the dissent's interpretation. Further, the common law "requires both parties to know the others' actions to act in concert" such that liability is found. Thus, "when parties act independently for their own benefit, such as in arms-length seller-customer relationships," the necessary concerted action between the parties is missing. Additionally, for liability under § 271(a), the dissent would require the parties to know that their joint conduct would cause damage. This is inconsistent with the statute and the Supreme Court's precedent that "a direct infringer's knowledge or intent is irrelevant."

The majority further indicated that the dissent's reasoning would lead to unexpected results. In one scenario, "a customer who performs a single step of a patented method by merely using a product as intended would . . . liable for direct infringement." Doing so would fill the "gaping hole" left open by divided infringement, but open a much larger door where innocent customers would be liable for patent infringement for their simple actions.

Lastly, the majority pointed out that the dissent's position would conflict with the long established rule that "a dependent claim cannot be infringed unless the independent claim from which it depends is also infringed." Applying this logic a hypothetical set of claims in which an independent claim recites a replicating step and a dependent claim adds a tagging step, "the dissent's rule . . . would result in a party that performs the tagging step but not the replicating step being liable for infringing [the dependent claim] while not being liable for infringing the broader claim from which it depends."

The majority concluded by pointing out that "Limelight's customers decide what content, if any, they choose to have delivered by Limelight's CDN and only then perform the [tagging step]." This "form contract does not obligate Limelight's customers to perform any of the method steps." Based on this interpretation, it was not established that "Limelight's customers were acting as agents of or otherwise contractually obligated to Limelight or that they were acting in a joint enterprise."

4. Conclusion

As the law regarding divided infringement currently stands, it is possible to use a contract between a company and its customer to avoid infringement of a patented method when those parties split carrying out the patented steps. The fact pattern of this case provides a recipe for doing so. As a result, it is more critical than ever that claim drafters focus method claims so that their steps are likely to be carried out by a single entity. For example, Claim 34 of the '703 patent could be written as "for a given page normally served from the content provider domain, obtaining a tagged representation of at least some of the embedded objects of the page . . . ."

Still, this case may not be at an end. The dissent's final argument was that an en banc action is required to do what the majority proposes, as it is at odds with binding precedent from a previous panel. On June 12th, Akamai requested such an en banc review.

Akamai Technologies, Inc. v. Limelight Networks, Inc. (Fed. Cir. 2015)
Panel: Chief Judge Prost and Circuit Judges Linn and Moore
Opinion for the court by Circuit Judge Linn; dissenting opinion by Circuit Judge Moore

Posted at 10:00 PM in Federal Circuit, Infringement - Contributory or Induced | Permalink | Comments (5)

May 26, 2015

Commil USA, LLC v. Cisco Systems, Inc. (2015)

By Kevin E. Noonan --

The Supreme Court handed down its decision in Commil USA, LLC v. Cisco Systems, Inc. today and in doing so reprised several themes that have emerged over the past decade of the Court's activist approach to patent law. The Court reversed the Federal Circuit (albeit technically that court's decision was vacated) and in the process chastised the Federal Circuit for misinterpreting both patent law and the Court's decision in Global-Tech Appliances, Inc. v. SEB S.A. (2014). The Court also reiterated its belief that patent law is replete with dichotomies (here, between infringement and invalidity), consistent with its "Goldilocks" views regarding the effects of too much versus too little patent protection. And, somewhat bizarrely the Court takes the time to venture into the policy issues surrounding abusive patent litigation seemingly unrelated to the issues before the Court. (To be fair, the Court "sides" with the patentee in its decision, which runs contrary to the general trend but this may be considered the exception that probes the rule rather than any great epiphany by the Court.)

To recap, the technology in this case relates to Commil's patents for implementing short-range wireless networks. "The technical details of Commil's patent are not at issue," according to the Court (which must be a relief -- there is something endearingly quaint about how the Court describes the technology:

So it suffices to say, with much oversimplification, that the patent is for a method of implementing short-range wireless networks. Suppose an extensive business headquarters or a resort or a college campus wants a single, central wireless system (sometimes called a Wi-Fi network). In order to cover the large space, the system needs multiple base stations so a user can move around the area and still stay connected. Commil's patent relates to a method of providing faster and more reliable communications between devices and base stations.

And the opinion refers to the Federal Circuit opinion for a discussion of the claims. The case comes to the Court after the Federal Circuit reversed the District Court for ruling that Cisco's evidence that it had a "good faith belief" that Commil's claims were invalid was inadmissible for rebutting liability for inducing infringement. The question before the Court, whether a good-faith belief in invalidity is a defense to induced infringement, was taken for consideration after five of the twelve Federal Circuit judges framed that issue in their dissent to the en banc court's decision not to consider the question itself.

The Court's opinion was written by Justice Kennedy joined by all the Justices except the Chief Justice, who joined Justice Scalia's dissent, and Justice Breyer who did not participate in the decision. In addition, Justice Thomas joined the majority only with regard to the Court's decision on the question presented (Section II-B) and its foray into abusive patent litigation policy (Part III). The holding is simple: "A defendant's belief regarding patent validity is not a defense to an induced infringement claim." But of course the more interesting aspect of the decision is the Court's reasoning in arriving at its decision.

From the outset, the Court states that this conclusion is not limited to inducing infringement under 35 U.S.C. § 271(b) but extends to literal infringement under § 271(a) (a strict liability tort) and contributory infringement under § 271(c) (like inducement, a tort that requires knowledge of the existence of the patent). Before arriving at this question, however, the Court (in Part II-A) revisits its decision in Global Tech, motivated according to the opinion by Commil's argument, supported by the Department of Justice as amicus, that all that is required to satisfy the intent prong of the test for inducement is knowledge of the patent. In particular, Commil and the government argued that intent does not require that the accused infringer knew she was infringing, and the Court rejects this interpretation of its Global Tech decision. The opinion cites language in the Global Tech opinion to the effect that "liability for induced infringement can only attach if the defendant knew of the patent and knew as well that 'the induced acts constitute patent infringement.'" The Court illustrates this with a hypothetical: under the government's view, "even if the defendant reads the patent's claims differently from the plaintiff, and that reading is reasonable, he would still be liable because he knew the acts might infringe. Global-Tech requires more. It requires proof the defendant knew the acts were infringing" (emphasis added).

Turning to the question before the Court, the opinion asserts that "[t]he question the Court confronts today concerns whether a defendant's belief regarding patent validity is a defense to a claim of induced infringement. It is not. The scienter element for induced infringement concerns infringement; that is a different issue than validity." Moreover, "because infringement and validity are separate issues under the Act, belief regarding validity cannot negate the scienter required under §271(b)." The opinion cites Cardinal Chemical Co. v. Morton Int'l, Inc.: "A party seeking a declaratory judgment of invalidity presents a claim independent of the patentee's charge of infringement." 508 U. S. 83, 96 (1993). Invalidity doesn't make the acts non-infringing; it eliminates any liability for them according to the Court, and when infringement is the issue, the patent's validity is not the question to be confronted, the opinion citing Cardinal Chemical Co. The Court perceives a dichotomy at play in these questions: "in Deposit Guaranty Nat. Bank v. Roper, 445 U. S. 326 (1980), the Court explained that an accused infringer 'may prevail either by successfully attacking the validity of the patent or by successfully defending the charge of infringement'" and this choice (for this Court) makes questions of an accused infringer's subjective (albeit "good faith") belief in whether a patent claim is invalid irrelevant to the question of whether she intends to infringe.

The Court finds evidence of Congress's intent to raise this dichotomy in the structure of the Patent Act:

[T]he issues of infringement and validity appear in separate parts of the Patent Act. Part III of the Act deals with "Patents and Protection of Patent Rights," including the right to be free from infringement. §§251– 329. Part II, entitled "Patentability of Inventions and Grants of Patents," defines what constitutes a valid patent. §§100–212.

And in this regard, the Court also notes that non-infringement and invalidity are "two separate defenses" governed by separate sections of the statute and that they can be asserted separately as further evidence of this statutory dichotomy.

The Court then makes the strongest patent-affirming statement it has made in any case over the past decade, when the opinion voices concern with the presumption of validity, which is "a 'common core of thought and truth' reflected in this Court's precedents for a century," citing Radio Corp. of America v. Radio Engineering Laboratories, Inc., 293 U. S. 1, 8 (1934). "[I]f belief in invalidity were a defense to induced infringement," according to the opinion, "the force of that presumption would be lessened to a drastic degree, for a defendant could prevail if he proved he reasonably believed the patent was invalid." This would be a way to "circumvent the high bar Congress is presumed to have chosen: the clear and convincing standard," citing Microsoft Corp. v. i4i Ltd. Partnership, (2011).

In reference to Justice Scalia's arguments in dissent (without ever referencing that there is a dissent), the majority states that it does not dispute Scalia's logic that one cannot infringe an invalid patent, calling the rubric "a simple truth, both as a matter of logic and semantics." But that isn't the issue as the majority sees it:

[T]he questions courts must address when interpreting and implementing the statutory framework require a determination of the procedures and sequences that the parties must follow to prove the act of wrongful inducement and any related issues of patent validity.

The Court then quotes Judge Newman from her dissent: "[v]alidity and infringement are distinct issues, bearing different burdens, different presumptions, and different evidence." 720 F. 3d, at 1374 (opinion of Newman, J.).

The opinion also states that the "orderly administration of the patent system" requires that infringement and invalidity be considered separately, and thus the District Court was correct in ruling evidence of Cisco's belief that Commil's claims were invalid was inadmissible. The jurisprudential point: "invalidity is not a defense to infringement, it is a defense to liability" and thus "a belief as to invalidity cannot negate the scienter required for induced infringement."

The Court also considers the availability of other avenues to show invalidity -- declaratory judgment actions, citing MedImmune, Inc. v. Genentech, Inc., 549 U. S. 118, 137 (2007), inter partes review under the AIA (§ 316) or ex parte reexamination (§ 302) (which is what Cisco actually did) as alternative ways for an accused infringer to raise challenges to invalidity, the majority agreeing that claims found to be invalid cannot be infringed (versus permitting mere good faith belief to be enough).

The Court finds an analogy between tortious interference with contract and whether the contract is invalid, which is irrelevant as a defense, or perhaps more aptly, trespass on property without knowledge that the trespasser had no legal right to enter a property not being sufficient to eliminate liability for the trespass.

Just when an opinion by this Court gives the impression that the Court has decided to cabin its role in patent law within its Constitutional boundaries of interpreting the Patent Act and deciding whether Congress has exceeded the limitations on its exercise of the patent power under Article I, along comes Part III of the opinion to shatter the illusion. Here, the Court takes on the issue of "patent trolls," citing Justice Kennedy's concurring opinion in eBay Inc. v. MercExchange, L.L.C., 547 U. S. 388, 396 (2006) (which if memory serves was not the question the Court addressed in eBay). Broaching this issue in this case shows the political nature of the Court's patenting opinions and its penchant for espousing policy. Here, this takes the guise of the castigating practice of pursuing "frivolous" lawsuits that "may assert vague claims of infringement, and may be designed to obtain payments that are based more on the costs of defending litigation than on the merit of the patent claims," citing testimony before Congress by the Federal Trade Commission. These questions have nothing to do with the question before the Court, which the Court admits:

No issue of frivolity has been raised by the parties in this case, nor does it arise on the facts presented to this Court. Nonetheless, it is still necessary and proper to stress that district courts have the authority and responsibility to ensure frivolous cases are dissuaded. If frivolous cases are filed in federal court, it is within the power of the court to sanction attorneys for bringing such suits. Fed. Rule Civ. Proc. 11.

And:

It is also within the district court's discretion to award attorney's fees to prevailing parties in "exceptional cases." 35 U. S. C. §285; see also Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U. S. ___, ___–___ (2014) (slip op., at 7–8).

The justification is that:

These safeguards, combined with the avenues that accused inducers have to obtain rulings on the validity of patents, militate in favor of maintaining the separation expressed throughout the Patent Act between infringement and validity.

Which seems a thin reed to support this frolic and detour from the question before the Court.

Justice Scalia dissents, in an opinion joined by Chief Justice Roberts (both of whom dissented in FTC v. Actavis on the question of the presumption of validity), making a very simple point: "[o]nly valid patents confer [a] right to exclusivity -- invalid patents do not," citing FTC v. Actavis, Inc. (2013). Accordingly:

Because only valid patents can be infringed, anyone with a good-faith belief in a patent's invalidity necessarily believes the patent cannot be infringed. And it is impossible for anyone who believes that a patent cannot be infringed to induce actions that he knows will infringe it. A good-faith belief that a patent is invalid is therefore a defense to induced infringement of that patent.

Commil USA, LLC v. Cisco Systems, Inc. (2015)
Opinion of the Court by Justice Kennedy, joined by Justice Ginsburg, Alito, Sotomayor, and Kagan, and joined as to Parts II-B and III by Justice Thomas; dissenting opinion by Justice Scalia, joined by Chief Justice Roberts; Justice Breyer took no part in consideration or decision of the case.

Posted at 11:59 PM in Infringement - Contributory or Induced, Supreme Court | Permalink | Comments (2)

January 13, 2015

Promega Corp. v. Life Technologies Corp. (Fed. Cir. 2014)

By Donald Zuhn --

Last month, in Promega Corp. v. Life Technologies Corp., the Federal Circuit determined that U.S. Patent Nos. 5,843,660; 6,221,598; 6,479,235; and 7,008,771, which are owned by Promega Corp., are invalid under 35 U.S.C. § 112, first paragraph, for lack of enablement, and therefore reversed the District Court's denial of a motion for summary judgment by Life Technologies Corp., Invitrogen IP Holdings, Inc., and Applied Biosystems, LLC ("LifeTech"). The Federal Circuit also determined that substantial evidence supported the jury's finding that LifeTech infringed U.S. Patent No. RE37,984 ("the Tautz patent") under both 35 U.S.C. §§ 271(a) and 271(f)(1), and therefore reversed the District Court's grant of judgment as a matter of law (JMOL) of noninfringement. In addition, the Federal Circuit affirmed the District Court's determination that certain sales of LifeTech's accused products are not covered by a license agreement between Promega and LifeTech. Finally, finding four of the five asserted patents to be invalid, the Federal Circuit vacated the jury's damages award and remanded the case back to the District Court to determine damages for LifeTech's infringement of the Tautz patent.

The case involves five patents that relate to multiplex amplification of short tandem repeat (STR) loci (i.e., amplification of multiple STR loci in a single reaction). In construing the asserted claims of the four patents owned by Promega, the District Court determined that a given claim recited either a "closed loci set," in which the claim was limited to only the loci listed in the claim, or an "open loci set," in which the claim was not limited to only the loci listed in the claim but rather encompassed any other loci combination that included at least the loci listed in the claim. An example of a claim reciting a closed loci set is claim 25 of the '660 patent:

25. A kit for simultaneously analyzing short tandem repeat sequences in at least three loci, comprising a container which has oligonucleotide primers for co-amplifying a set of at least three short tandem repeat loci, wherein the set of loci are selected from the sets of loci consisting of: [STR loci sets].

An example of a claim reciting an open loci set is claim 23 of the '598 patent:

23. A kit for simultaneously analyzing short tandem repeat sequences in a set of short tandem repeat loci from one or more DNA samples, comprising:
A single container containing oligonucleotide primers for each locus in a set of short tandem repeat loci which can be co-amplified, comprising HUMCSF1PO, HUMTPOX, and HUMTH01.

The District Court's construction turned on whether the claim recited "a set of . . . loci . . . consisting of . . ." or "a set of . . . loci . . . comprising . . . ." The distinction between the two types of claims is significant because developing a successful multiplex amplification reaction is more complicated than performing a series of separate amplification reactions.

The Tautz patent, which is owned by Max-Planck-Gesellschaft zur Förderung der Wissenschaften E.V. and is exclusively licensed to Promega, claims a kit for testing at least one STR locus that contains: (1) a mixture of primers; (2) a polymerizing enzyme such as Taq polymerase; (3) nucleotides for forming replicated strands of DNA; (4) a buffer solution for the amplification; and (5) control DNA.

LifeTech manufactures genetic testing kits that provide components for carrying out a multiplex amplification of STR loci from DNA samples, wherein the kits contain (1) a primer mix; (2) Taq polymerase; (3) PCR reaction mix including nucleotides; (4) a buffer solution; and (5) control DNA.

In 2010, Promega sued LifeTech for infringement of the four Promega patents and the Tautz patent, alleging that LifeTech had sold kits that were not covered by the license agreement between the parties (the license agreement limited Lifetech's use of the patents-in-suit to activities related to legal proceedings, i.e., live forensic investigations conducted by police officers). The parties moved for summary judgment on infringement and invalidity, with the District Court denying Lifetech's enablement challenge to the Promega patents and determining that LifeTech's sales outside the license agreement's field of use were infringing. Following trial, the jury returned a verdict of willful infringement. LifeTech then moved for JMOL and the District Court granted the motion, finding that Promega had failed to present sufficient evidence to sustain a jury verdict under §§ 271(a) and 271(f)(1), and vacated the finding of infringement.

In an opinion by Judge Chen, joined by Judge Mayer, with Chief Judge Prost dissenting as to the majority's finding of infringement under § 271(f)(1), the Federal Circuit reversed the District Court's denial of LifeTech's motion for summary judgment of invalidity, reversed the District Court's grant of JMOL of noninfringement, affirmed the District Court's determination that certain LifeTech sales were not covered by the parties' license agreement, vacated the jury's damages award, and remanded the case back to the District Court to determine damages for LifeTech's infringement of the Tautz patent.

With respect to the issue of enablement, the Federal Circuit disagreed with Promega's characterization of unrecited STR loci in the open loci set claims as merely unrecited elements, noting that "[i]n this field of technology, introducing even a single STR locus to an existing loci multiplex significantly alters the chemistry of, and has an unpredictable effect on, whether the resulting multiplex will successfully co-amplify." The Court indicated that "[t]here is no genuine dispute that identifying STR loci multiplexes that will successfully co-amplify is a complex and unpredictable challenge, and as a result, undue experimentation may be required to identify a successfully co-amplifying multiplex that adds even a single new locus to an existing loci combination."

The Court found support for its determination in both its MagSil Corp. v. Hitachi Global Storage Techs., Inc., 687 F.3d 1377, 1381 (Fed. Cir. 2012), and Wyeth & Cordis Corp. v. Abbott Labs., 720 F.3d 1380 (Fed. Cir. 2013), decisions. With regard to MagSil, the Federal Circuit states that:

[W]e need not delineate the precise boundary at which Promega's claims are no longer enabled. It is sufficient to conclude, based on Promega's own statements, that the teachings of Promega's patents would not have enabled a skilled artisan at the time of filing to identify significantly more complicated sets of STR loci combinations that would successfully coamplify -- such as those found in LifeTech's STR kits -- without undue experimentation. Thus, like the patentee in MagSil, Promega's "difficulty in enabling the asserted claims is a problem of its own making." 687 F.3d at 1384.

As for its Wyeth decision, the Court noted that "[w]hile the claims of the Promega patents are not directed to a genus of compounds as in Wyeth, the claims at issue here similarly cover potentially thousands of undisclosed embodiments in an unpredictable field."

With respect to the issue of infringement under § 271(f)(1), the Federal Circuit began by noting that the District Court had determined that § 271(f)(1) requires (1) the involvement of another, unrelated party to "actively induce the combination of . . . components," and (2) that at least two components be supplied from the United States to satisfy the "substantial portion of the components" language of the statute. In the instant case, the District Court determined that no other party was involved in LifeTech's assembly of the accused kits, and that Lifetech supplied only a single component from the U.S. (i.e., LifeTech manufactured the Taq polymerase component of its kits in the U.S. and shipped this component to its facility in the U.K. for incorporation into the kits).

In determining that the District Court erred in granting LifeTech's motion for JMOL, the Federal Circuit first concluded that "to actively induce the combination" does not require the involvement of a third party, noting that:

Had Congress wanted to limit "induce" to actions completed by two separate parties, it could easily have done so by assigning liability only where one party actively induced another "to combine the [patented] components." Yet, "another" is absent from § 271(f)(1). Instead, the focus of the statute is to induce "the combination of the components of the patented invention."

The Court also noted that:

Given Congress' choice of broadening language -- which focuses solely on the activity abroad ("the combination") rather than the actor performing the combination -- and acknowledgment of "the need for a legislative solution to close a loophole" identified in Deepsouth [Packing Co. v. Laitram Corp., 406 U.S. 518 (1972)], it is unlikely that Congress intended § 271(f)(1) to hold companies liable for shipping components overseas to third parties, but not for shipping those same components overseas to themselves or their foreign subsidiaries [citation omitted].

As for the issue of whether infringement under § 271(f)(1) requires that at least two components be supplied from the U.S., the Court stated that:

We hold that there are circumstances in which a party may be liable under § 271(f)(1) for supplying or causing to be supplied a single component for combination outside the United States. And based on the facts of this particular case, we conclude that substantial evidence supports the jury's verdict that LifeTech is liable for infringement under § 271(f)(1) for shipping the Taq polymerase component of its accused genetic testing kits to its United Kingdom facility.

In so holding, the Court explained that "[n]othing in the ordinary meaning of 'portion' suggests that it necessarily requires a certain quantity or that a single component cannot be a 'portion' of a multi-component invention."

In dissenting from the majority's finding of infringement under § 271(f)(1), Chief Judge Prost indicated that she "read § 271(f)(1) and its requirement of active inducement to necessarily mean inducement of another" (emphasis in original), adding that "[i]ndeed, we have never before held -- in the context of either § 271(f) or § 271(b) -- that a party can induce itself to infringe." The Chief Judge noted that "[t]wice the Supreme Court has held that inducement liability requires a third party," citing Global-Tech Appliances, Inc. v. SEB SA, 131 S. Ct. 2060 (2011), and Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005) (an analogous copyright case), and countered that "[t]he majority cannot point to a single case -- from the Supreme Court or other wise -- that supports its contrary interpretation of inducement."

Promega Corp. v. Life Technologies Corp. (Fed. Cir. 2014)
Panel: Chief Judge Prost and Circuit Judges Mayer and Chen
Opinion by Circuit Judge Chen; dissenting-in-part opinion by Chief Judge Prost

Posted at 11:59 PM in Enablement, Federal Circuit, Infringement - Contributory or Induced | Permalink | Comments (16)

January 06, 2015

June 02, 2014

Limelight Networks, Inc. v. Akamai Technologies, Inc. (2014)

By Donald Zuhn --

Today, in Limelight Networks, Inc. v. Akamai Technologies, Inc., the Supreme Court determined that a defendant is not liable for inducing infringement of a patent under 35 U. S. C. § 271(b) when no one has directly infringed the patent under § 271(a) or any other statutory provision, and reversed a decision of the Federal Circuit finding that Limelight Networks, Inc. had infringed U.S. Patent No. 6,108,703.

The '703 patent, which is assigned to the Massachusetts Institute of Technology and is exclusively licensed to Akamai Technologies, Inc., is directed to a method of delivering electronic data using a content delivery network ("CDN"). The claimed method of the '703 patent calls for the designation of certain components (or "tagging") of a content provider's website to be stored on a server and accessed from those servers by internet users. Limelight operates a CDN and carries out several steps of the claimed method of the '703 patent, but instead of tagging components of its customers' websites, requires its customers to do their own tagging.

At trial, a jury found that Limelight infringed the '703 patent, and awarded Akamai $40 million in damages. However, following the Federal Circuit's decision in Muniauction, Inc. v. Thomson Corp., 532 F. 3d 1318 (2008), the District Court granted Limelight's motion for reconsideration of its earlier motion for judgment as a matter of law, concluding that Muniauction precluded a finding of direct infringement under § 271(a). In Muniauction, the Federal Circuit determined that direct infringement requires a single party to perform every step of a claimed method, and that this requirement is satisfied even though the steps are actually undertaken by multiple parties when a single defendant "exercises 'control or direction' over the entire process such that every step is attributable to the controlling party." In concluding that Muniauction precluded a finding of direct infringement in Limelight, the District Court determined that infringement of the '703 patent required tagging, and that Limelight did not control or direct its customers' tagging. The Federal Circuit affirmed, but following en banc review, concluded that the evidence could support a judgment in Akamai's favor on a theory of induced infringement, explaining that § 271(b) liability arises when a defendant carries out some steps of a claimed method while encouraging others to carry out the remaining steps.

Writing for a unanimous Court, Justice Alito notes that "our case law leaves no doubt that inducement liability may arise 'if, but only if, [there is] . . . direct infringement,'" citing Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U. S 336, 341 (1961). While "[o]ne might think that this simple truth is enough to dispose of this appeal," the opinion indicates that "the Federal Circuit reasoned that a defendant can be liable for inducing infringement under §271(b) even if no one has committed direct infringement within the terms of §271(a) (or any other provision of the patent laws), because direct infringement can exist independently of a violation of these statutory provisions." However, Justice Alito explains that "there has simply been no infringement of the method [of the '703 patent], because the performance of all the patent's steps is not attributable to any one person," and "where there has been no direct infringement, there can be no inducement of infringement under §271(b)."

In supporting the Court's decision, Justice Alito suggests that "[t]he Federal Circuit's contrary view would deprive §271(b) of ascertainable standards," and "require the courts to develop two parallel bodies of infringement law: one for liability for direct infringement, and one for liability for inducement." The opinion also notes that § 271(f)(1) reinforces the Court's reading f § 271(b), the former of which imposes liability on a party who "supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention . . . in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States." Justice Alito explains that § 271(f)(1) illustrates that "when Congress wishes to impose liability for inducing activity that does not itself constitute direct infringement, it knows precisely how to do so," and states that "[t]he courts should not create liability for inducement of noninfringing conduct where Congress has elected not to extend that concept."

In support of the Federal Circuit's interpretation of § 271(b), Akamai argued that tort law imposes liability on a defendant who harms another through a third party, even if that third party would not himself be liable, and given the background tort principles against which the Patent Act of 1952 was enacted, it should not matter that no one is liable for direct infringement in this case. The opinion, however, counters that "the reason Limelight could not have induced infringement under §271(b) is not that no third party is liable for direct infringement; the problem, instead, is that no direct infringement was committed" (emphasis in opinion). Akamai next argued that tort liability sometimes attaches where two or more defendants inflict injury, even if each defendant's conduct, standing alone, would not be actionable. But the opinion responds that in the instant case "under the Muniauction rule, [Akamai's] interests in the '713 patent have not been invaded."

In response to Akamai's attempts to analogize § 271(b) to the federal aiding and abetting statute (18 U.S.C. § 2), the opinion indicates that "[t]he analogy does not hold up," indicating that "[w]hile we have drawn on criminal law concepts in the past in interpreting §271(b), we think it unlikely that Congress had this particular doctrine in mind when it enacted the Patent Act of 1952, given the doctrine's inconsistency with the Act's cornerstone principle that patentees have a right only to the set of elements claimed in their patents and nothing further" (citation omitted). Akamai concluded by arguing that "[the Supreme Court's] interpretation of §271(b) . . . permit[s] a would-be infringer to evade liability by dividing performance of a method patent's steps with another whom the defendant neither directs nor controls." The opinion "acknowledge[s] this concern," but declares that "[a]ny such anomaly . . . would result from the Federal Circuit's interpretation of §271(a) in Muniauction." Justice Alito concludes that:

A desire to avoid Muniauction's natural consequences does not justify fundamentally altering the rules of inducement liability that the text and structure of the Patent Act clearly require -- an alteration that would result in its own serious and problematic consequences, namely, creating for §271(b) purposes some free-floating concept of "infringement" both untethered to the statutory text and difficult for the lower courts to apply consistently.

As for Akamai's request that the Court review the merits of the Federal Circuit's Muniauction rule for direct infringement under § 271(a), the Court declines the invitation, noting that the question presented clearly focused on § 271(b), not § 271(a), and therefore Limelight "did not address that important issue in its opening brief." Moreover, the Supreme Court's decision "necessitates a remand to the Federal Circuit, and on remand, the Federal Circuit will have the opportunity to revisit the §271(a) question if it so chooses."

Limelight Networks, Inc. v. Akamai Technologies, Inc. (2014)
Opinion of the Court by Justice Alito

Posted at 11:59 PM in Infringement - Contributory or Induced, Supreme Court | Permalink | Comments (4)

November 13, 2013

AstraZeneca LP v. Breath Ltd. (Fed. Cir. 2013)

By Donald Zuhn --

In an appeal decided last month, the Federal Circuit reversed and remanded a decision of noninfringement by the District Court for the District of New Jersey with respect to U.S. Patent No. 7,524,834, and affirmed the District Court's finding of obviousness with respect to U.S. Patent No. 6,598,603. The panel also affirmed the District Court's dismissal of invalidity counterclaims brought by Defendants-Cross Appellants Apotex, Inc. and Apotex Corp., and the lower court's decisions regarding the bond amount.

The '834 patent is directed to a sterile, pharmaceutically effective budesonide product, which is used to treat asthma in children. Claims 1 and 50 of the '834 patent recite (emphasis in opinion):

1. A pharmaceutically acceptable micronized powder composition at least 98.5% by weight of which is pure budesonide or an ester, acetal or salt thereof, wherein the composition meets the criteria of sterility according to the US Pharmacopoeia [sic] 23/NF18, 1995, pages 1686-1690 and 1963-1975. ’834 Patent col. 11 ll. 48–52.

50. A pharmaceutically acceptable suspension consisting of a micronized powder composition at least 98.5% by weight of which is pure budesonide or an ester, acetal or salt thereof suspended in an aqueous solution, wherein the suspension meets the criteria of sterility according to the US Pharmacopoeia [sic] 23/NFl8, 1995, pages 1686-1690 and 1963-1975.

The '603 patent is directed to a once-daily treatment of patients with budesonide administered by nebulizer. Independent claim 1 of the '603 patent recites:

1. A method of treating a patient suffering from a respiratory disease, the method comprising administering to the patient a nebulized dose of a budesonide composition in a continuing regimen at a frequency of not more than once per day.

AstraZeneca markets a "once-daily nebulized budesonide suspension used to treat asthma in children" under the name Pulmicort Respules®.

Seeking approval to market generic versions of AstraZeneca's Pulmicort Respules® drug, Appellees Breath Ltd.; Apotex, Inc. and Apotex Corp.; Sandoz, Inc.; and Watson Laboratories, Inc. filed Abbreviated New Drug Applications (ANDAs) with the FDA. In response to those ANDA filings, AstraZeneca brought suit against the Appellees for induced infringement of the patents at issue, and the Appellees counterclaimed for declaratory judgments of invalidity and noninfringement.

With respect to Appellees Apotex, Inc. and Apotex Corp. (Apotex), the District Court granted AstraZeneca's request for a preliminary injunction, preventing Apotex from launching its generic product, subject to AstraZeneca's posting of a bond. In response to a motion made by Apotex at trial, the District Court increased the bond amount to cover future damages, but refused to increase the bond amount to cover past damages. Following a bench trial, the District Court found that claims 50 and 51 of the '834 patent were not infringed by Apotex and Sandoz, and that claims 1, 2, 50, and 51 of the '834 patent were not infringed by Breath and Watson. Although the District Court determined that Appellees' labels induce infringement of claims 1-3, 7, 8, 12-17, and 24-28 of the '603 patent, the lower court also found these claims invalid as anticipated and obvious. Finally, the District Court declined to exercise jurisdiction over Apotex's invalidity counterclaims directed to certain claims of the '603 patent (the lower court had first dismissed AstraZeneca's assertion of infringement with respect to these same claims).

The District Court's finding of noninfringement with respect to the '834 patent was based on the lower court's construction of the phrase "micronized powder composition" as meaning "heat sterilized finely divided dry particles." The District Court also determined that "heat sterilized" refers to "particles that have been sterilized through a process, consistent with heat sterilization, that allows them to essentially maintain the same pharmacological activity, physico-chemical properties, chemical purity, and physical form as the starting material." AstraZeneca argued that the District Court erred by importing limitations into the claims because the plain meaning of the phrase "micronized powder composition" has nothing to do with heat sterilization. In reversing and remanding the District Court's finding of noninfringement, the Federal Circuit noted that "[w]ith respect to the ordinary, plain meaning of the term 'micronized powder composition,' none of the three words imposes, or even implies, any form of sterilization." While acknowledging that "[t]here is no dispute that the patent refers only to dry heat sterilization as the preferred method of achieving the claimed 'micronized powder composition' and criticizes, often sharply, other forms of sterilization," the panel determined that such criticism did not rise to the level of a disavowal of the phrase's otherwise plain meaning. Noting that the '834 patent describes processes, products, and methods of use, the opinion states that "[a]t most, the specification is confusing with respect to whether it limits only the disclosed process to a specific form of sterilization or both the process and the disclosed product to a specific form of sterilization," adding that this "confusion leaves available an interpretation of the patent that the products, as opposed to the processes, are not limited to any particular form of sterilization." Because the Court could not conclude that AstraZeneca disclaimed non-heat sterilized micronized powder compositions, the panel determined that the District Court erred by adding the "heat sterilized" limitation into the asserted claims, and that a more accurate construction of the phrase "micronized powder composition" would be "finely divided dry particles."

As for the District Court's finding of invalidity with respect to the asserted claims of the '603 patent, the lower court determined that the '603 patent disclosed "once-daily dosing of nebulized budesonide" and that a skilled artisan would have been motivated to arrive at this "obvious conclusion." In particular, the District Court found that the prior art included numerous studies that "taught the safety and efficacy of once-daily inhaled budesonide," including once-daily treatment of children and that practitioners would attempt to titrate a drug dose down to the lowest possible dose, i.e., a once-a-day dose. The District Court also found that the prior art taught that nebulizers were the "most practical delivery device for certain patients like young children." In affirming the District Court's finding of obviousness, the panel identified no clear error in the lower court's underlying factual determinations, and determined that those facts established by clear and convincing evidence that the asserted claims of the '603 Patent are obvious.

With respect to the District Court's decision to decline jurisdiction over Apotex's invalidity claims, the panel declined to say that the lower court abused its discretion in dismissing those counterclaims, as "[t]he decision whether to accept jurisdiction of a Declaratory Judgment counterclaim is quintessentially left to the discretion of the district court."

Finally, with respect to District Court's decisions regarding the bond amount, the Federal Circuit first noted that a bond amount is a procedural issue that is not unique to patent law, and therefore, that the law of the Third Circuit applied. Looking to the Third Circuit's decision in Sprint Commc'n Co. v. Cat Commc'n Int'l, 335 F.3d 235 (3d Cir. 2003), the Federal Circuit concluded that "the Third Circuit would consider improper an increase to cover past damages even in the present circumstances." In affirming the District Court's refusal to increase the bond amount to cover past damages, the opinion explains that:

AstraZeneca expected that its liability would be limited to the bond amount before Apotex's motion. AstraZeneca cannot be fairly informed after it obtained the benefit of the injunction that it must later pay more for the benefit it already obtained in order to obtain the benefit of a continued injunction. The bond would no longer serve to cabin or fix liability, and that would result in an unexpected liability, which Sprint sought to prohibit. It is immaterial whether the injunction has been dissolved, as in Sprint, or continues, as it does here. Either way: the party securing the injunction decided to accept the preliminary relief by posting the bond required at the time. Later requiring that party to post a higher bond for a period that already has passed results in a situation where that bond no longer fixes exposure or caps liability. The party no longer simply could withdraw its request for an injunction over that period because that period already would have passed.

AstraZeneca LP v. Breath Ltd. (Fed. Cir. 2013)
Nonprecedential disposition
Panel: Chief Judge Rader and Circuit Judges Bryson and Linn
Opinion by Circuit Judge Linn

Posted at 11:14 PM in Claim Construction, Federal Circuit, Infringement - Contributory or Induced, Obviousness | Permalink | Comments (0)

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