Federal Circuit, 2008-1170 (April 1, 2009) signment is ambigu- - - PDF document

Euclid Chemical Co. v. Vector Corrosion Technologies, Inc.

Federal Circuit, 2008-1170 (April 1, 2009)

In Re Marek Z. Kubin and Raymond G. Goodwin

Federal Circuit 2008-1184 (April 3, 2009)

signment is ambigu-

• us requiring that

extrinsic evidence be considered to deter- mine the intent of the

• Assignment. Accord-

ingly, the case was remanded to the Dis- trict court to deter- mine whether the Assignment, in light

• f the extrinsic evi-

dence, transferred the ‘742 patent rights to Vector. In concurring with the majority of the issue of assignment

• f the ‘742 Patent,

Judge Newman stated that the intent of the parties was not nec- essary in determining whether the rights of the ‘742 Patent were assigned. In reaching this conclusion, Newman states that the Assign- ment referred to only one patent (U.S. Pat No. 6,033,553) and the technology assigned of all

• ther applications differed from that of the ‘742

patent. In this case, the Federal Circuit addressed whether a patentee can assign the rights of a patent not mentioned in the language of an assignment. Euclid, original owner of U.S. Pat- ent No. 6,217,742 (‘742 Patent) appealed District Court’s holding that the Assignment at issue unam- biguously transferred the ‘742 pat- ent to Vector. The Assignment, dated December 20, 2001, is signed by Jack Bennett, the sole inventor, and executed in Ohio. The ‘742 patent is a continuation-in- part of US Patent 6,033,553 (the ‘553 patent) listed in the Assign- ment and was issued before the execution date of the Assignment. The District Court held that the As- signment unambiguously assigned all rights in the ‘553 patent and any and all continuations-in-part thereof, which included the ’742 patent according to the District Court. The Federal Circuit disagree, rul- ing that the Assignment was am- biguous with respect to the ‘742 patent, and noting that the ’742 patent was issued on April 17, 2001, which was before the date of the Assignment. Further, the As- signment referred to another is- sued patent (U.S. Pat No. 6,033,553) expressly. Under Ohio law, the Federal Cir- cuit asserted that when confronted with an issue of contractual inter- pretation, the role of a court is to give effect to the intent of the par- ties to the agreement. Where a contract is ambiguous, the CAFC noted that a court may consider extrinsic evidence to ascertain the parties’ intent, under Ohio law. The Federal Circuit further held that the Assignment includes lan- guage that suggests that it was not intended to effect an assignment of the ‘742 patent because the Assign- ment specifically assigns all inter- est in and to the inventor’s “US, Canadian, and European applica- tions for patents and issued US pat- ent”, but this language refers merely to “applications” plural and “issued US patent” singular. Since such language can be interpreted as excluding the ‘742 patent, the Federal Circuit declared the As-

• ne a conception of a particular DNA

encoding it.” Deuel further stated that the obvious to try standard is an inap- propriate test for obviousness. Under Deuel, obvious to try did not constitute

• bviousness. The Federal Circuit states

that the obvious to try standard of Deuel has been “unambiguously discredited” by KSR. As KSR held, “the fact that a combination was obvious to try might In this decision, the Federal Circuit provided guidance for determining when a DNA sequence is obvious under KSR. i On appeal from the Board of Patent Appeals and Interferences’ (BPAI) ruling that Kubin’s and Goodwin’s patent was obvious under 35 U.S.C. § 103(a), the Federal Circuit upheld the BPAI’s ruling stating that the use of con- ventional tools and techniques to isolate and clone DNA sequences that encode known polypeptides is obvious in light of the abundant prior art. Before addressing the matter at hand, the Federal Circuit commented on the In re Deuel decision, which held that “knowledge of a protein does not give

Inside this issue:

Euclid Chemical Co. v. Vector Corrosion Tech-

1

In Re Marek Z. Kubin and Raymond G. Goodwin

1-2

Transcore, LP and TC License, LTD. v. Electronic Transaction Consultants Corporation

2

Every Penny Counts, Inc.

• v. American Express, Co.

2-3

In re Spirits Int’l, N.V.

3-4

Bilski v. Doll

4

The Sughrue Review

June 1, 2009 Volume 1, Issue 5

Transcore, LP and TC License, LTD. v. Electronic Transaction Consultants Corporation

Federal Circuit 2008-1430 (April 8, 2009)

In upholding the District Court’s ruling, the Federal Circuit stated that the language of the covenant not to sue was unambiguous and unconditional language. Therefore, the sale by Mark IV was authorized, and TransCore’s rights were exhausted with respect to the three patents listed in the settlement agreement. As for the later issued patent, the Federal Circuit found an implied license with a scope of rights of that of the three other patents because the remaining patent had definable property rights. The Federal Circuit held that an uncon- ditional covenant not to sue equates to a license. On appeal from a grant of summary judgment in the Northern District of Texas, in favor of Electronic Transaction Consultants Corporation (ETC) finding that installation of a patented product was not infringing due to a settlement agreement with TransCore, the Federal Circuit upheld the summary judgment ruling. TransCore originally sued Mark IV for infringing several of its patents related to automated toll collection systems. The suit was resolved through a settle- ment agreement which included an un- conditional covenant not to sue. The covenant not to sue states, “Transcore agrees and covenants not to bring any demand, claim, lawsuit, or action against Mark IV for future infringement.” Mark IV later sold the technology claimed in three of the patents listed in the agree- ment and one patent not yet issued for installation by the Illinois State Toll High- way Authority System which was tested and run by ETC. TransCore then sued ETC claiming infringement of their pat-

• ents. ETC responded with a motion for

summary judgment claiming that their activity was permitted under the TransCore-Mark IV settlement under the doctrines of patent exhaustion, implied license, and legal estoppel.

In Re Marek Z. Kubin and Raymond G. Goodwin (cont.)

Federal Circuit 2008-1184 (April 3, 2009) Page 2

monoclonal antibody specific to the pro- tein for cloning this gene” would have rendered Kubin’s and Goodwin’s inven- tion obvious to a skilled artisan because

• f the “reasonable expectation of suc-

cess” in obtaining Kubin’s and Good- win’s invention from the cited prior art. show that it was obvious under [35 U.S.C.] § 103.” As a result, the Federal Circuit says that the correct standard is expressed in In re O’Farrell which held that “an obviousness finding was appro- priate where the prior art contained de- tailed enabling methodology for practic- ing the claimed invention.” Kubin and Goodwin claimed DNA mole- cules for the Natural Killer Cell Activa- tion Inducing Ligand (NAIL) protein. In finding the isolated DNA molecule obvi-

• us, the Federal Circuit relied on the

Valiante reference’s disclosure of a method for isolating the human NAIL DNA sequence, and the Matthew refer- ence’s disclosure of a mouse protein that activates mouse NR cells and chromoso- mal mapping, cloning, expression, and molecular characterization of the gene coding for the NAIL protein. Further, Matthew identified a human homologue for the mouse gene. Based on these teachings, the Federal Circuit held that “a protein of interest, a motivation to isolate the gene coding for that protein, and illustrative instructions to use a retail sales transactions into predeter- mined charitable or savings accounts. During the Markman hearing for claim construction in the District Court, the claim term at issue was “excess cash.” This case is an appeal form the District Court’s ruling of non-infringement by appellees, American Express Co., Visa U.S.A., Inc., Green Dot Corp MasterCard International, Inc., First Data Corp., Valutec Card Solutions, LLC, Incomm Holdings, Inc. and Comdata Stored Value Solutions, Inc. Every Penny Counts, Inc. (EPC) appeals. EPC’s pat- ent at issue concerns a method for do- nating excess cash to charities and sav- ing accounts and an automatic donation system for contributing excess cash from

Every Penny Counts, Inc. v. American Express, Co.

Federal Circuit 2008-1438 (April 30, 2009)

The Sughrue Review

In re Spirits Int’l, N.V .

Federal Circuit 2008-1369, April 29, 2009 563 F.2d 1347 (Fed. Cir. 2009)

and prosecution history.” After review- ing the specification, the Federal Circuit found that “excess cash” is what is left

• ver after the merchant subtracts the

price of the items the consumer wishes to buy from the cash the consumer ten- ders to complete the sale. This construc- tion was consistent with the District Court’s adopted construction of “an amount selected by the payor beyond the total amount owed at the point of sale.” Based on this definition, the Fed- eral Circuit found the defendant’s activ- ity non-infringing. The appellees’ proposed interpretation was an “amount selected by the payor beyond the total amount due at the point

• f sale.” Whereas, EPC relied on a non-

traditional meaning of sales price which was “an amount . . . offered in excess of the sale price of merchandise.” EPC’s proposed interpretation of “sales price” was the portion of a transaction that a merchant would account for as a

• sale. For instance, the “sale price” of a

$50 gift card may be as low as $0, be- cause according to EPC, the merchant does not typically account for transac- tions involving gift cards as “sales” until the gift card is redeemed. Based on this interpretation, EPC asserts that the claims were being infringed since the purchaser was using “excess cash” to buy the gift card. In arriving at the decision to uphold the District Court, the Federal Circuit fo- cused on the specification to determine the meaning of “excess cash”, as gov- erned by Phillips v. AWH Corp. Phillips states that in determining the meaning of a term, the court should consider the “claim term in the claims, specification, ment was met because of its deception to Russian speakers. The Board further concluded that there “is a presum[ption] that a word in on of the common, modern languages of the world will be spoken or understood by an appreciable number of U.S. consum- ers for the product or service at issue.” The Board also took judicial notice of the fact that according to the 2000 U.S. Cen- sus, Russian is spoken by 706,000 peo- ple in the United States. 706,000 people was apparently deemed an “appreciable number.” Applicant’s survey was not found to be persuasive or probative. On Appeal, the Federal Circuit agreed with the Board on the issue of translation under the doctrine of foreign equiva- lents, but emphasized that the inquiry must also include a materiality test. The Court extensively discussed the history

• f subsection e(3), before concluding

that subsection e(3) like subsection (a), the false advertising provision of the Lanham Act, and the common law, re- quires that a significant portion of the Do Russian speakers in the U.S. con- sume more vodka than the rest of the U.S. population? In In re Spirits Int’l N.V., the Federal Cir- cuit overturned the Trademark Trial and Appeal Board (“Board”) finding that the mark MOSKOVSKAYA was geographi- cally deceptively misdescriptive for vodka under 15 U.S.C. 1052(e)(3). The Court held that the Board had applied an incorrect test for materiality and vacated and remanded the case accordingly. ******* Spirits International, N.W. (“Spirits”) applied to register the mark MOSK- OVSKAYA for vodka. The Examiner re- fused registration based on the conclu- sion that the mark was geographically deceptively misdescriptive. Applying the doctrine of foreign equivalents, the Examiner translated the mark to “of or from Moscow.” The Examiner then found that Moscow was a generally known geographic location and that the public would likely believe the goods were from Moscow because there was a goods/place association between vodka and Moscow. The Examiner further found that such an association would be material to consumers because Russian vodka is highly regarded. Spirits did not dispute the translation and conceded that the vodka will not be manufactured, produced or sold in Moscow, nor will it have any other connection with Moscow. Spirits filed a response and motion for reconsideration, relying on a mall- intercept survey. The motion was denied and the case was reviewed by the Board. The Board reasoned that the analysis of whether a mark should be rejected un- der subsection e(3) requires that the mark materially deceive the public. In assessing the materiality element, the Board stated that “an appreciable num- ber of consumers for the goods or ser- vices at issue” must be deceived, but concluded that “it is never necessary to show all, or even most, of the relevant consumers would be deceived. All that is required is a showing that some por- tion of relevant consumers will be de- ceived.” (emphasis added). The Board concluded that the materiality require-

Every Penny Counts, Inc. v. American Express, Co. (cont.)

Federal Circuit 2008-1438 (April 30, 2009) Page 3

Volume 1, Issue 5

The Sughrue Review

that these groups would together be a substantial portion of the intended audi- ence.” A prima facie case of material deception might be proven if such is the case. relevant consuming public be deceived; and that population is often the entire U.S. population. There was no conten- tion in this case that the relevant con- suming public is specifically composed

• f a target community. The Court found

that the Board had failed to consider whether Russian speakers were a “substantial portion of the intended au- dience.” The Court did not opine on the ultimate question of whether a substan- tial portion of the intended audience would be materially deceived. It did note however, that only .25% of the U.S. population speaks Russian, and that “if

• nly one quarter of one percent of the

relevant consumers was deceived, this would not be, by any measure, a sub- stantial portion. However, it may be that Russian speakers are a greater percent- age of the vodka-consuming public; that some number of non-Russian speakers would understand the mark to suggest that the vodka came from Moscow; and

In re Spirits Int’l, N.V . (cont.)

Federal Circuit 2008-1369, April 29, 2009 563 F.2d 1347 (Fed. Cir. 2009)

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Certiorari granted in Bilski v. Doll On June 1, 2009, the U.S. Supreme Court granted certiorari of the Federal Circuit’s decision in In re Bilski. The Petition for Writ of Certiorari presented two questions: Whether the Federal Circuit erred by holding that a “process” must be tied to a particular machine or apparatus, or transform a particular article into a different state or thing (“machine-or-transformation” test), to be eligible for patenting under 35 U.S.C. §101, despite this Court's precedent declining to limit the broad statutory grant of patent eligibility for “any” new and useful process beyond excluding patents for “laws of nature, physical phenomena, and abstract ideas.” Whether the Federal Circuit's “machine-or-transformation” test for patent eligibility, which effectively forecloses meaningful patent protection to many business methods, contradicts the clear Congressional intent that patents protect “method[s] of doing or conducting business.” 35 U.S.C. §273. On October 30, 2008 in In re Bilski, the en banc Federal Circuit held that the exclusive test for whether a proc- ess claim is directed to statutory subject matter under 35 U.S.C. § 101 is the “machine-or-transformation” test. The effect of this decision has been to make business method patents virtually impossible to obtain and to make patents directed to software and computer-implemented processes more difficult to obtain. The en banc Federal Circuit’s decision is predicated on its interpretation that Supreme Court precedent, in- cluding Gottschalk v. Benson and Diamond v. Diehr, recognizes no other test for determining whether a process claim is directed to statutory subject matter. The Supreme Court will now decide whether the Federal Circuit’s interpretation is correct.

Contributors to this edition: Ryan Cady & Quadeer Ahmed