International Trade Appeals Apple Inc. v. International Trade - - PDF document

This publication brings you a digest of precedential cases decided last month by the United States Court of Appeals for the Federal Circuit.

International Trade Appeals

Apple Inc. v. International Trade Commission No. 2012-1338 (Fed. Cir. August 7, 2013) ................................................. 2 Ashley Furniture Industries, Inc. v. United States No. 2012-1196 (Fed. Cir. August 19, 2013) .......................................... 2 Itochu Building Products v. United StatesNo. 2013-1044 (Fed. Cir. August 19, 2013)....................................................... 3

Miscellaneous and Vaccine Appeals

Carson v. Secretary of Health and Human Services No. 2010-5089 (Fed. Cir. August 28, 2013) ...................................... 4

Merit Systems Protection Board (MSPB) Appeals

Gallo v. Department of Transportation, No. 2011-3094 (Fed. Cir. August. 5, 2013) .......................................................... 4 Gargiulo v. Department of Homeland Security, No. 2012-3157 (Fed. Cir. August. 16, 2013) ............................................ 5 Kaplan v. Conyers No. 2011-3207 (Fed. Cir. August. 20, 2013) ......................................................................................... 5

Patent and Trademark Appeals

Cheese Systems, Inc. v. Tetra Pak Cheese & Powder Systems, Inc.No. 2012-1463, -1501 (Fed. Cir. August. 6, 2013) ..... 5 Aria Diagnostics, Inc. v. Sequenom, Inc. No. 2012-1531 (Fed. Cir. August. 9, 2013) ........................................................ 6 Skinmedica Inc. v. Histogen Inc. No. 2012-1560 (Fed. Cir. August 23, 2013) .................................................................... 6 Taurus IP, LLC v. DaimlerChrysler Corp. Nos. 2008-1462, -1463, -1464, -1465 (Fed. Cir. August. 9, 2013) ................... 7 Monolithic Power Systems, Inc., et al. v. O2 Micro International Ltd. No. 2012-1221 (Fed. Cir. August 13, 2013).......... 9 3M Innovative Properties Co., et al. v. Tredegar Corp. No. 2012-1241 (Fed. Cir. August 13, 2013) ............................... 10 Apple Inc. v. Samsung Electronics Co., Ltd., et al. Nos. 2012, 1600, 2013-1146 (Fed. Cir. August 23, 2013) ..................11 Hamilton Beach Brands, Inc. v. Sunbeam Products, Inc. No. 2012-1581 (Fed. Cir. August 14, 2013) ............................ 13 Aevoe Corp. v. AE Tech. Co. et al. No. 2012-1422 (Fed. Cir. August 29, 2013) ............................................................... 13 University of Utah v. Max-Planck-Gesellschaft Zur Forderung Der Wissenschaften E.V. et al. No. 2012-1540, -1541,

• 1661 (Fed. Cir. August 19, 2013) ..................................................................................................................................... 14

Rembrandt Vision Technologies, L.P. v. Johnson & Johnson Vision Care, Inc.No. 2012-1510 (Fed. Cir. August 7, 2013) .................................................................................................................................................. 15 Leo Pharmaceutical Products, Ltd. v. Teresa Stanek Rea, Acting Director, U.S. Patent & Trademark Offjce No. 2012- 1520 (Fed. Cir. August. 12, 2013) ...................................................................................................................................... 15 Trading Technologies Int’l, Inc. v. Open E Cry, LLC No. 2012-1583 (Fed. Cir. August. 30, 2013) .................................. 16

Veterans Appeals

Kernea v. Shinseki No. 12-7142 (Fed. Cir. August 1, 2013) .............................................................................................. 17 National Organization of Veterans’ Advocates, Inc. v. Secretary of Veterans Affairs No. 11-7191 (Fed. Cir. August 5, 2013) .................................................................................................................................................. 17 Middleton v. Shinseki No. 13-7014 (Fed. Cir. August 15, 2013) ...................................................................................... 18 To hear audio recordings of the oral arguments please click here. September 2013 Vol. 17, No. 2

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International Trade Appeals

Apple Inc. v. International Trade Commission

• No. 2012-1338

(Fed. Cir. August 7, 2013) Opinion by Circuit Judge Moore In Certain Mobile Devices, and Related Software Thereof (Inv. No. 337-TA-750), Complainant Apple Inc. fjled a complaint at the U.S. International Trade Commission under Section 337 asserting that many of Respondent Motorola Mobility, Inc.’s smartphones and tablets infringed U.S. Patent Nos. 7,663,607 (’607 patent), 7,812,828 (’828 patent), and 5,379,430 (the ’430 patent), which are directed to touchscreens. Administrative Law Judge Essex issued an Initial Determination on January 13, 2012 fjnding that Motorola did not violate Section 337. ALJ Essex determined that the ‘828 patent was valid, but that Motorola’s accused smartphones and tablets do not infringe the asserted claims

• f the ‘828 patent. The claim term “mathematically fjtting

an ellipse” was construed to require the method to perform “a mathematical process” whereby “an ellipse is actually fjtted to the data,” and ALJ Essex found that Motorola’s products do not fjt an ellipse to the electrode data. Although he found that Motorola’s accused smartphones and tablets literally infringed the asserted claims the ‘607 patent, ALJ Essex held that the claims were invalid for anticipation based on U.S. Patent No. 7,372,455 (Perski ’455) and obviousness based

• n a prior art reference describing the SmartSkin touchscreen

system. On March 16, 2012, the Commission issued its opinion reviewing-in-part and affirming the Initial Determination of no violation of Section 337 and terminated the investigation. On review, the Commission affjrmed ALJ Essex’s fjnding of obviousness for the ‘607 patent in view

• f the SmartSkin prior art reference in combination with

Japan Unexamined Patent Application Publication No. 2002- 342033A to Jun Rekimoto. The Commission also found that Motorola had demonstrated by clear and convincing evidence that the asserted claims of the ‘607 patent are invalid for

• bviousness based on the ability of one of ordinary skill

in the art to combine the disclosure in the SmartSkin prior art reference with other familiar elements. Apple appealed the Commission’s claim construction and noninfringement

• pinions for the ‘828 patent and its determinations of

anticipation and obviousness for the ‘607 patent. Apple argued at the Federal Circuit in Apple Inc.

• v. International Trade Commission that Perski ‘455 did not

qualify as prior art because the priority application failed to provide written support for the relevant disclosures in Perski ‘455 and that Perski ‘455 did not disclose all features of the claims of the ‘607 patent. The Federal Circuit held that Perski ‘455 constituted prior art because the disclosure in the provisional application was suffjcient to provide written support for Perski ‘455. However, the Federal Circuit found that Perski ‘455 failed to correctly incorporate by reference the teaching of a document required to anticipate Claim 10, and therefore, Claim 10 was found not to be anticipated by Perski ‘455. As to the SmartSkin prior art reference, Apple argued on appeal that the Commission “improperly employed a hindsight analysis” and failed to evaluate the secondary considerations of nonobviousness presented by Apple. The Federal Circuit agreed and noted that it was “troubled by the ITC’s obviousness analysis” and that the Commission “never even mentioned, much less weighed as part of the

• bviousness analysis, the secondary consideration evidence.”

The case was vacated and remanded for the Commission to consider Apple’s evidence related to secondary considerations

• f nonobviousness.

On infringement of the ‘828 patent, Apple argued

• n appeal that requiring calculation of the ellipse parameters

after the ellipse has been fjtted unnecessarily limits the claim. The Federal Circuit agreed with Apple and concluded that the plain language of the claim simply requires the software to “mathematically fjt” the ellipse without implying a separate step of calculating the ellipse parameters. The Federal Circuit vacated the Commission’s fjnding of noninfringement and remanded the case for additional consideration of infringement of the ‘828 patent. To read the full opinion click here. Ashley Furniture Industries, Inc. v. United States

• No. 2012-1196

(Fed. Cir. August 19, 2013) Opinion by Circuit Judge Moore The Court of Appeals for the Federal Circuit (“Federal Circuit”) affjrmed the U.S. Court of International Trade’s (“CIT”) dismissal of complaints fjled by Ashley Furniture, Inc., Ethan Allen Global, Inc., and Ethan Allen Operations, Inc. (“Appellants”), holding that Appellants were not Affected Domestic Producers (“ADPs”) within the meaning of the now-repealed Continued Dumping and Subsidy Offset Act (“Byrd Amendment”) and were therefore not entitled to compensation under that Act. A U.S. furniture manufacturer and several labor unions fjled a petition that led to an antidumping investigation

• f Chinese wooden bedroom furniture manufacturers. As

part of the investigation, the International Trade Commission

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(“ITC”) issued a questionnaire to Appellants, domestic producers of wooden bedroom furniture, to which Appellants were required to respond. One of the questions asked, “Do you support or oppose the petition?” Ashley Furniture, Inc. answered “Oppose” and Ethan Allen answered “Take no position.” Later, when the ITC issued an antidumping duty

• rder and prepared a list of ADPs eligible to receive a share
• f the antidumping duties under the Byrd Amendment, the

ITC did not include Appellants because it determined that Appellants were not “interested parties in support of the petition” and therefore not ADPs. The Federal Circuit held that its earlier decision in SKF USA, Inc. v. U.S. Customs & Border Protection, 556 F.3d 1337 (Fed. Cir. 2009) (“SKF”), in which it held that the Byrd Amendment’s requirement for petition support is not facially unconstitutional, disposed of Appellants’ facial First Amendment challenges. The Federal Circuit stated that the language of the Byrd Amendment statute, 19 U.S.C. § 1675c(b)(1)(A), “requires ‘support of the petition’ in order to obtain a distribution” and that “[a] producer meets that requirement when it ‘indicate[s] support . . . by letter or through questionnaire response.” The Federal Circuit held that “a producer who never indicates support for the petition by letter or through questionnaire response cannot be an ADP.” The Court noted that its later decision in PS Chez Sidney, L.L.C. v. U.S. Int’l Trade Comm’n, 684 F.3d 1374 (Fed. Cir. 2012) (“Chez Sidney”), which was decided after the CIT’s rulings on Appellants’ complaints, involved a different factual scenario. The producer in Chez Sidney received Byrd Amendment distributions because, although the producer answered “Take no position” to the support/oppose question in the fjnal questionnaire, the producer indicated support for the petition in the preliminary questionnaire. To read the full opinion click here. Itochu Building Products v. United States

• No. 2013-1044

(Fed. Cir. August 19, 2013) Opinion by Circuit Judge Taranto Domestic producers of softwood lumber products (collectivThis case concerns whether the exhaustion of administrative remedies is required before a party could challenge the United States Department of Commerce (“Commerce”)’s decision in court. Itochu Building Products (“Itochu”) asked Commerce to revoke part of an antidumping duty order applicable to imported steel nails at an early specifjed date. Itochu, nevertheless, failed to submit any comment following Commerce’s preliminary ruling that a later date would apply. After Commerce maintained its position on the later effective date in its fjnal ruling, Itochu challenged the ruling in the Court of International Trade (“CIT”). The CIT, relying on its discretionary authority under 28 U.S.C. § 2637(d), invoked the requirement of exhaustion

• f administrative remedies, and held that Itochu waived

its objection to Commerce’s effective-date determination because it did not resubmit its comment after the preliminary ruling rejected its position. On appeal, the Court of Appeals for the Federal Circuit (“CAFC”) found that the CIT erred in requiring exhaustion in the present case and reversed its ruling as an abuse of discretion. The CAFC found that the requirement of “appropriateness” under 28 U.S.C. § 2637(d) requires that the invocation of exhaustion serves some practical purpose when applied. To determine appropriateness in a particular case, inquiry into the purposes served and any harm caused by requiring such exhaustion is needed. Requiring exhaustion has been held inappropriate when pursuing an administrative challenge would clearly be futile, or when the issue is a “pure question of law”. The CAFC held that no purpose was served by requiring Itochu to have resubmitted its effective-date argument after Commerce announced the preliminary ruling for two reasons. First, nothing in Commerce’s clear rejection

• f Itochu’s position, in either the preliminary or fjnal ruling,

amounted to any material consideration that Itochu had failed to address. Second, Commerce’s fjrm position on the effective-date issue strongly suggests that a resubmission by Itochu would have been futile. Meanwhile, the CAFC found that Itochu had a concrete interest in avoiding a substantial delay in obtaining a fjnal agency decision that making such a pointless fjling could have caused. Weighing the interests

• n both sides, the CAFC concluded that the CIT could not

properly find it “appropriate” to invoke the exhaustion doctrine to bar consideration of Itochu’s challenge on the merits. The CAFC further distinguished the present case from Corus Staal BV v. United States, 502 F.3d 1370 (Fed.

• Cir. 2007) (“Corus Staal”) in two respects: (1) unlike in Corus

Staal where Commerce’s position refmected discretionary policy decisions, here, Commerce maintained that its position was mandated by statute; and (2) Commerce had not identifjed any new factual or legal argument that Itochu could have made, whereas in Corus Staal, Corus failed to submit factual

• r legal arguments in detail when it still had the opportunity.

For the foregoing reasons, the CAFC reversed the CIT’s decision dismissing Itochu’s challenge to Commerce’s effective-date determination for failure to exhaust administrative remedies, and remanded the case for further proceedings. To read the full opinion click here.

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The aforementioned international trade case summaries were provided by Steptoe & Johnson. Contributing author: Laura Ardito.

Miscelleaneous and Vaccine Appeals

Carson v. Secretary of Health and Human Services

• No. 2010-5089

(Fed. Cir. August 28, 2013) Opinion by Judge Wallach The Federal Circuit affjrmed the Court of Federal Claims’ decision affjrming the Special Master’s decision dismissing Carson’s claim for compensation under the Vaccine Act as untimely fjled. After being born on May 22, 1996, Kit Carson (“Carson”) received numerous vaccines in the fjrst thirteen months of his life. At the time of his 18-month checkup, his doctor noted that he was behind in speech. At 24 months, his doctor evaluated his speech as delayed. By his three-year checkup in May 1999, his doctor classifjed Carson as having severe language delay and referred him to the Developmental Evaluation Center in Asheville, North Carolina. Kit Carson was diagnosed with autism spectrum disorder on April 26,

• 2001. On July 22, 2002, his parents (“Petitioners”) fjled a

petition for compensation under the Vaccine Act on his behalf. The Government moved to dismiss the petition as untimely, arguing that Petitioners fjled their petition more than 36 months “after the date of the occurrence of the fjrst symptom or manifestation of onset or of the signifjcant aggravation” of his injury. The Special Master determined that the fjrst symptom of autism spectrum disorder was recorded in May 1999 when Kit was classifjed as exhibiting speech delay. Thus, in order to be timely fjled, the petition must have been fjled by May of 2002. Petitioners appealed the Special Master’s decision to the Court of Federal Claims. The Claims Court sustained the decision. The appeal to the Federal Circuit followed. The Federal Circuit began its analysis with the text of the Vaccine Act. The Act provides that a petition for compensation may not be fjled “after the expiration of 36 months after the date of occurrence of the fjrst symptom or manifestation of onset or of the signifjcant aggravation of such injury.” 42 U.S.C. § 300aa-16(a)(2). The Court then turned to its decision in Markovich v. Sec’y of Health & Human Services, 477 F.3d 1353 (Fed. Cir. 2007), in which it adopted an objective standard focusing on the “recognized standards of the medical profession at large” to determine when fjrst symptoms occur for purposes of the Act. Op. at

• 5. The Court then noted that it was undisputed that Carson

fjrst demonstrated speech delay more than 36 months before the petition was fjled. Id. Petitioners argued that the medical community would not recognize speech delay as evidence of a vaccine injury because it was too vague and common of an occurrence to provide an objectively recognize symptom of vaccine

• injury. The Court disagreed, stating that the Special Master’s

conclusion that Carson’s pediatrician’s observation of Carson’s “severe language delay” in May 1999 was an

• bjectively recognizable symptom or manifestation was based
• n medical records and was not arbitrary and capricious. Id.

at 6-7. The Court noted that the key question was not whether the condition was suffjcient to support a diagnosis of autism, but whether the condition was a symptom or manifestation

• f onset of the alleged injury. Id. at 7. The Court further

noted that it had previously explained that “fjrst symptoms or manifestations of onset might include subtle symptoms that a petitioner would recognize only with the benefjt of hindsight, after a doctor makes a defjnitive diagnosis of injury.” Id. at 8 (internal quotation marks omitted). The Court declined to decide whether the “fjrst symptom need only be recognizable by the medical community with the benefjt of hindsight,”

• r “whether the fjrst symptom must be recognizable by the

medical community as indicative of the alleged vaccine injury at the time the symptom occurs.” Id. at 8 n.4 (internal quotation marks omitted). Because the petition was not fjled within 36 months of Carson’s fjrst symptom, the petition was

• untimely. Accordingly, the Federal Circuit affjrmed.

To read the full opinion click here. The aforementioned vaccine case summary was provided by Alsotn & Bird. Contributing author: Benn Wilson.

Merit Systems Protection Board (MSPB) Appeals

Gallo v. Department of Transportation,

• No. 2011-3094

(Fed. Cir. August 5, 2013) Opinion by Circuit Judge Linn In this attorney fees case, the Federal Circuit held that it does not have authority to award fees under the Back Pay Act to employees of the Federal Aviation Administration (FAA) and therefore denied Ms. Gallo’s request for fees. The court noted that, prior to 2012, the Back Pay Act did not apply to the FAA. In 2012, however, Congress passed an amendment to 49 U.S.C. § 40122 adding the language “Notwithstanding any other provision of law, retroactive to

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April 1, 1996, the [Merit Systems Protection] Board shall have the same remedial authority over such employee appeals that it had as of March 31, 1996.” The court concluded that the amendment provided the Board, not the court, with the described remedial authority. “This language indicates no intention to allow this court to award attorney fees under the Back Pay Act against the FAA.” (emphasis in original). To read the full opinion, click here. Gargiulo v. Department of Homeland Security,

• No. 2012-3157

(Fed. Cir. August 16, 2013) Opinion by Circuit Judge Bryson In this case involving the revocation of a security clearance, the Federal Circuit held that federal employees are entitled to notice of the reasons for a revocation or suspension

• f their security clearance and an opportunity to make a

meaningful response regarding those reasons to someone in the agency with the authority to affect that decision. Specifjcally, the court held that these rights are found in 5 U.S.C. § 7513(b), not in the Due Process Clause of the Fifth

• Amendment. The court affjrmed the fjnal decision of the

Merit Systems Protection Board (Board). To read the full opinion, click here. Kaplan v. Conyers

• No. 2011-3207

(Fed. Cir. August 20, 2013) Opinion by Circuit Judge Wallach In this en banc decision, the Federal Circuit held that the Merit Systems Protection Board (Board) cannot review an agency’s determinations concerning the eligibility

• f an employee to occupy a “sensitive” position, regardless
• f whether that sensitive position requires the employee to

access classifjed information. The court reversed the Board’s decision that found the Board’s review to be limited only in cases involving security clearances. The court found that Dep’t of the Navy v. Egan, 484 U.S. 518 (1988), which prohibits the Board from merits review of agency adverse actions based on the denial, revocation, and suspension of a security clearance, also extends to Board review of determinations involving an employee’s eligibility to occupy a sensitive position. The court found that Egan’s “rationale applies to all prediction

• f risk regarding national security.”

To read the full opinion, click here. The aforementioned Merit Systems Protection Board case summaries were provided by MSPB. Contributing author: Jeffrey Gauger.

Patent & Trademark Appeals

Cheese Systems, Inc. v. Tetra Pak Cheese & Powder Systems, Inc.

• No. 2012-1463, -1501

(Fed. Cir. August 6, 2013) Opinion by Chief Judge Rader In Cheese Systems, the Federal Circuit affjrmed summary judgment that Cheese Systems, Inc. (“CSI”) infringed Tetra Pak’s ‘347 patent under the doctrine of equivalents and that CSI had not proven the patent was invalid as anticipated or obvious. The ‘347 patent-at-issue is directed to a cheese- making vat. To make cheese, milk and other additives are combined in a vat. Prior to the invention, such vats were typically vertical vats in which agitator panels, driven by long shafts on a vertical axis, either cut or stirred a semi-solid “coagulum” of ingredients used to make cheese. The agitator panels were two-sided, with cutting edges on one side and stirring edges on the other. Because of ineffjciencies in those vats, cheese makers began turning vertical vats horizontally

• n their sides so that the shafts lay on an axis parallel to the
• ground. Prior art taught that the shafts should turn in the

same direction, or “co-rotate.” Co-rotation caused problems, however, which the ‘347 patent sought to solve with two

• improvements. It taught that the shafts should contra-rotate,

and that the agitator panels should be arranged so that they would present either cutting or stirring sides to the shared space in between the shafts called the common volume. In that way, only cutting or stirring could occur at one time. The accused CSI device contained two contra- rotating horizontal shafts that either cut or stirred the coagulum at one time. CSI argued that its agitator panels did not meet the “generally common plane” limitation, which the district court construed in part as requiring the panel to be “on the whole fmat.” The Federal Circuit rejected the construction as too restrictive, and concluded that CSI’s agitator panels, having more than two cutting and stirring edges in a common plane, satisfjed the limitation. On this issue, the Court reversed the district court’s denial of no literal infringement. In addition, the Court affjrmed the district court’s determination that CSI’s vat satisfjed the “agitator panel” limitation. And in affjrming the lower court’s ruling that CSI’s vat satisfjed the “horizontal” claim term, the Federal Circuit rejected CSI’s argument that the patent required the horizontal axes to be parallel to the ground, holding that in the art the “horizontal”

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claim term allowed some measure of incline. Concerning CSI’s invalidity defenses, the Federal Circuit rejected CSI’s assertion that each of two prior art patents anticipated the ‘347 patent. The patents focused on problems inherent in co-rotation, and although they briefmy mentioned contra-rotation, neither patent discussed re-

• rienting the agitator panels so that during contra-rotation
• nly cutting or stirring occurred.

As for obviousness, the Federal Circuit rejected one

• f CSI’s prior-art combinations for the same reason it rejected

the anticipation argument – the patents barely mentioned contra-rotation, and a person of skill would have viewed the patents as suggesting cutting and stirring simultaneously rather than re-orienting one shaft’s agitator panels so that

• nly one or the other occurred at one time. The Court also

affjrmed the district court’s rejection of another combination, which in part relied on an Austrian patent that CSI’s expert could not translate. A fjgure in the patent the expert relied

• n to show that the patent taught contra-rotation was at best

ambiguous. To read the full opinion click here. Aria Diagnostics, Inc. v. Sequenom, Inc.

• No. 2012-1531

(Fed. Cir. August 9, 2013) Opinion by Chief Judge Rader In Aria, on appeal from denial of a motion for preliminary injunction, the Federal Circuit vacated and remanded concluding that the district court had incorrectly construed the claims and improperly balanced the injunction factors. The ’540 patent at issue is directed to methods for identifying fetal genetic defects by analyzing cffDNA

• btained from a maternal blood sample. Such tests present

fewer risks and had a more dependable rate of detection. The Federal Circuit concluded that district court misconstrued the claim phrase “paternally inherited nucleic acid.” The trial court’s construction required that the father’s gene sequence be known in advance. The Federal Circuit

• disagreed. First, the Court noted that the claim language did

not limit the term although it would have been easy to do so by explicitly including a “known in advance” limitation. Next, the Federal Circuit analyzed the specifjcation and disagreed with the district court’s determination that a sentence in the specifjcation provided support for the limitation. The Federal Circuit found no “clear lexicography or disavowal.” The Federal Circuit concluded that there was no intention to limit the claims to the examples, pointing to explicit language that the examples “do not in any way limit the scope of the invention.” In addition, at least one of the examples was not limited to sequences known in advance to have come from the father. Finally, the Federal Circuit found that three events during prosecution that arguably related to construction of the phrase were ambiguous. The Federal circuit also concluded that the district court incorrectly construed “amplifying” when it limited the term to amplifying only paternally inherited DNA. Rather, the court concluded that the correct construction allowed for the claim to read on methods that also amplifjed other DNA so long as the paternally inherited DNA was amplifjed. Once again, the Court found no support in the claims, specifjcation,

• r prosecution history for the limitation imposed by the

district court. On the issue of whether the claims were directed to eligible subject matter, the Federal Circuit remanded for the district court to consider the Supreme Court’s ruling in Myriad. The Federal Circuit also provided guidance to the district court regarding its analysis of the injunction factors

• n remand. The court addressed four reasons given by the

district court for denial of the motion. In its guidance, the Federal Circuit indicated that: 1) the court could not assume that price erosion and loss of market share were reparable ; 2) the presence of other infringers does not negate irreparable harm; 3) the fact that the infringer might be put out of business was a factor to consider but did not control the balance of hardships; and 4) in assessing the public interest, Ariosa argued the injunction was contrary to the public interest because it marketed to a broader market including low-risk women, the court should consider that an expert organization warned against using cffDNA tests in low-risk women. To read the full opinion, click here. Skinmedica Inc. v. Histogen Inc.

• No. 2012-1560

(Fed. Cir. August 23, 2013) Opinion by Circuit Judge Prost In Skinmedica, the Federal Circuit affirmed summary judgment of non-infringement based on a dispositive claim construction issue. The two patents-at-issue generally concerned methods of producing dermatology products including conditioned cell culture mediums that could be used to treat

• wrinkles. For example, a conditioned cell culture medium

composition could be a liquid that is incubated with cells and treated with nutritional compounds, metabolites, and proteins to help the cells grow. Each of the patents described different ways to grow cells in a monolayer, two-dimensional, or three- dimensional culture. The relevant claims recited “culturing

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. . . cells in three dimensions.” The district court construed the claims to exclude culturing using “beads,” which the district court equated with culturing in two dimensions based on the intrinsic

• evidence. The district court found that the inventors acted

as their own lexicographers by consistently distinguishing beads from three-dimensional culturing in the specifjcation. For example, the specifjcation used the disjunctive “or” and the phrase “as opposed to” to contrast beads from three dimensional cultures. The only other reference to beads in the specifjcation also explicitly described beads as two dimensional by stating “beads (i.e., two dimensions).” It was undisputed that the accused product used beads, therefore, the district court granted summary judgment of non-infringement

• n this basis.

On appeal, the Federal Circuit addressed the district court’s claim construction of the “culturing . . . cells in three dimensions” limitation. The Federal Circuit found no basis to disturb the district court’s construction. The majority agreed that the specifjcation clearly showed that the inventor limited three-dimensional cultures to exclude beads, even without an express defjnition. The specifjcation repeatedly distinguished culturing with beads from culturing in three dimensions. The Federal Circuit emphasized that the ordinary meaning of a claim term can be disclaimed through repeated and defjnitive remarks in the written description and described the leading cases fjnding such implicit disclaimers. Also, the Court noted that during prosecution the inventor distinguished anticipatory prior art by arguing that the medium produced by two-dimensional cultures was inferior and chemically distinct from the medium produced by three dimensional

• cultures. The Federal Circuit found that the scope of the

claim was necessarily limited by the specifjcation as well as the prosecution disclaimer, thus, the federal Circuit affjrmed the summary judgment of non-infringement. To read the full opinion, click here. The aforementioned patent and trademark case summaries were provided by Jenner & Block. Contributing authors: Steve Trybus, inclusively;,Michael Babbit, Christopher Lay, and Chad Ray, respectively. Taurus IP, LLC v. DaimlerChrysler Corp.

• Nos. 2008-1462, -1463, -1464, -1465

(Fed. Cir. August 9, 2013) Opinion by Circuit Judge Schall In Taurus IP, LLC v. DaimlerChrysler Corporation, the Federal Circuit affirmed the district court’s (1) construction of the disputed claim terms, (2) judgment of invalidity regarding two of the asserted claims, (3) judgment

• f noninfringement of the patent, and (4) award of damages

based on the fjnding of an exceptional case. With respect to the alleged infringers’ counterclaim for breach of contract, the Federal Circuit affjrmed (1) the district court’s denial of the motion to dismiss for lack of personal jurisdiction, (2) liability for breach of contract, (3) the district court’s award

• f attorney’s fees for the amount incurred prosecuting the

breach of contract counterclaim, and (4) the imposition of evidentiary sanctions against the third party defendants for witness tampering. The Federal Circuit reversed the award

• f damages based on the attorney’s fees incurred defending

against the patent suit. Taurus IP, LLC (Taurus) sued various DaimlerChrysler Corporation (Chrysler) and Mercedes-Benz USA, Inc. (Mercedes) defendants alleging that their external websites infringed its patent (the DaimlerChrysler Patent Suit). Chrysler and Mercedes counterclaimed against Taurus for breach of contract and fjled a contract claim against various third party defendants, including Orion IP, LLC (Orion) and Erich Spangenberg, who was the managing member of Taurus and the related third party defendant corporations (the Breach

• f Warranty Suit). The breach of contract claims alleged that,

by fjling the DaimlerChrysler Patent Suit, Taurus and the third party defendants breached various provisions, including the warranty provision, of a 2006 settlement agreement with Orion. The patent at issue (the Taurus patent) claimed a computer system for managing product knowledge related to products offered for sale. Independent claim 16 recited a method for managing the product knowledge in which a data model, which establishes the relationship between data, is constructed from the input of data items and the user-defjned relationships between the data items. The data is input into the computer system, user-defjned relationship information is provided for a particular data item, and product knowledge is presented to a user based on the data model and the user- defined relationship. Taurus claimed that Chrysler and Mercedes’s external websites infringed claim 16 and four dependent claims by enabling visitors to their websites to confjgure a hypothetical vehicle, save that information, and identify a dealer with that confjguration in stock. In 2006, Chrysler and Orion entered into an agreement to settle Orion’s patent infringement suits against Chrysler and Mercedes. When it fjled the 2006 suits, Orion had the rights to the Taurus patent, but did not assert those

• rights. Instead, Orion transferred the Taurus patent a few

days after fjling suit. The patent was eventually transferred to

• Taurus. Spangenberg was the managing member of Orion and

Taurus and authorized the transfer to Taurus. In the settlement agreement’s warranty provision, Orion represented and warranted that “it has not assigned or otherwise transferred to

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any other Person any rights to any causes of action, damages,

• r other remedies, or any Orion Patents, claims counterclaims
• r defenses, relating to the Litigation.” Chrysler and

Mercedes claimed that Orion breached this provision by transferring the Taurus patent before it was asserted in the current DaimlerChrysler Patent Suit. In the DaimlerChrysler Patent Suit, the district court, after construing several claim terms, granted summary judgment to Chrysler and Mercedes upon finding no infringement and that claim 16 and dependent claim 27 were invalid as anticipated by prior art. The district court found the case to be exceptional and awarded damages. In the Breach of Warranty Suit, the district court rejected the out

• f state third party defendants’ motion to dismiss for lack of

personal jurisdiction and denied the third party defendants’ motion for summary judgment. A jury found breach of the warranty provision and the district court denied the third party defendants’ motion for judgment as a matter of law. The district court awarded damages to Chrysler and Mercedes and imposed sanctions on Orion and Spangenberg for pre-trial witness tampering. Taurus appealed the DaimlerChrysler Patent Suit and Orion and Spangenberg appealed the Breach

• f Warranty Suit.

The Federal Circuit affjrmed the holdings in the DaimlerChrysler Patent Suit. The district court properly construed the terms “user” and “user-defjned relationship information.” The district court properly rejected Taurus’s proposed claim constructions because its proposed construction of “user” was improperly broad based on its context and its proposed construction of “user-defined relationship information” confmicted with the plain language of the claim. The Federal Circuit affjrmed summary judgment

• n invalidity because claims 16 and 27 were anticipated by

prior art, a patent originally assigned to Trilogy Development Group, Inc. (the Trilogy patent). Taurus did not establish a date of invention earlier than the Trilogy patent fjling date. “Appendix A,” fjled with the Taurus patent, and the putative inventor’s testimony was insuffjcient to establish that the Taurus patent predated the Trilogy patent. While Appendix A included a creation date prior to the Trilogy patent fjling date, it also had a modifjcation date after the Trilogy fjling date with no indication of what was modifjed. Taurus failed to establish that Appendix A included all of the limitations in claims 16 and 27 suffjcient to show conception or represented reduction to practice of the entire process recited in those

• claims. The testimony of the putative inventor lacked

corroboration, as required by case law to prove date of

• conception. Thus, the district court did not err in fjnding

the Trilogy patent to be prior art. The district court properly found that the Trilogy patent anticipated the Taurus patent because the former disclosed every step recited in the latter and Taurus failed to present any genuine issue of material fact regarding anticipation. As to the not invalidated Taurus patent claims, the Federal Circuit affjrmed the district court’s grant of summary judgment to Chrysler and Mercedes on the issue

• f infringement. Taurus did not raise any genuine issue of

material fact and the district court did not err in its legal conclusion that the Chrysler and Mercedes websites did not fall within the Taurus patent claims based on the claim

• construction. Under the district court’s claim construction,

the Taurus patent claimed a method in which users may create or edit rules governing the relationships between data items. In contrast, the Chrysler and Mercedes websites merely permitted visitors to submit data to be processed by predetermined rules. Taurus failed to establish that a visitor to the Chrysler and Mercedes websites could create or edit the data relationships, as required by the district court’s claim

• construction. Thus, the district court did not err in concluding

that Taurus failed to show that the websites were practicing the limitations of the asserted claims. The Federal Circuit affjrmed the district court’s fjnding that the case was exceptional. Taurus’s infringement claim was objectively baseless because its proposed claim construction was unreasonably broad and unsupported by the written description. Moreover, the district court did not err in its implicit fjnding that Taurus knew the patent suit lacked a reasonable basis and was pursued and maintained in bad faith. The Taurus patent was directed at database administration, but the suit alleged infringement based on website visitors. Taurus continued the suit even after the claim terms were construed to include as “users” only those persons who could create and edit rules governing the relationships between data. The Federal Circuit affjrmed the holdings of the Breach of Warranty Suit, except it reversed the award of damages for the attorney’s fees incurred by Chrysler and Mercedes in defending against the DaimlerChrysler Patent Suit. The district court properly found personal jurisdiction over Orion and Spangenberg, both out of state defendants, under the alter ego doctrine because Spangenberg controlled Taurus and Orion and used that control to assert the Taurus patent against Chrysler and Mercedes. Spangenberg exerted control over Taurus and Orion because he managed the companies and he oversaw and authorized many of the companies’ actions relevant to the suit, including entering into the 2006 settlement agreement, transferring the Taurus patent, and fjling the DaimlerChrysler Patent Suit. Spangenberg sought to use Taurus as a means to assert the Taurus patent, which the settlement agreement arguably prohibited Orion from asserting, against Chrysler and Mercedes. Without jurisdiction over Orion, Chrysler and Mercedes would be unable to assert their counterclaim, a license-related defense

Page 9

to the DaimlerChrysler Patent Suit, and the district court would be unable to provide the relief Chrysler and Mercedes

• sought. Thus, the Federal Circuit found the district court

properly pierced the corporate veil to reach Spangenberg and reverse-pierced the corporate veil to reach from Spangenberg to Orion. The Federal Circuit affjrmed the district court’s denial of Orion and Spangenberg’s motions for summary judgment and judgment as a matter of law regarding the jury verdict fjnding breach of the warranty provision. The district court did not err in concluding that “relating to the [2006] Litigation” included causes of action involving the same facts and that the accused technology in the 2006 suits was identical to that accused in the DaimlerChrysler Patent

• Suit. Thus, there was no error in the district court’s denial
• f summary judgment. The Federal Circuit also found that

the district court properly denied judgment as a matter of law because a reasonable juror could have found for Chrysler and Mercedes. The Federal Circuit affjrmed the award of attorney’s fees incurred by Chrysler and Mercedes in prosecuting their Breach of Warranty Suit. Attorney’s fees are available to prevailing parties in breach of contract suits under Texas statute, the law applicable under the contract. Orion and Spangenberg had no right to a jury trial on the issue of traditional attorney’s fees and expert testimony was not required under the relevant Texas statute. The Federal Circuit reversed the award of damages, as measured by the attorney’s fees incurred by Chrysler and Mercedes in defending the DaimlerChrysler Patent Suit, for the Breach of Warranty Counterclaim. Chrysler and Mercedes only submitted evidence of the attorney’s fees in post-trial fjlings; they did not present evidence regarding damages to the jury. The post-trial fjlings cannot support an award of attorney’s fees as damages where, as in this breach

• f contract case, the substantive law requires damages to

be proved at trial. Chrysler and Mercedes did not present suffjcient evidence at trial to establish the award of damages. Thus, it was improper for the district court to award damages for the Breach of Warranty Counterclaim. The Federal Circuit affjrmed the district court’s imposition of evidentiary sanctions against Orion and Spangenberg for witness tampering. One of Spangenberg’s employees, Patrick Anderson, an attorney who formerly worked as a patent agent for Chrysler, contacted a potential Chrysler witness because Spangenberg suggested that the witness might commit perjury. The district court did not violate due process and did not abuse its discretion by imposing evidentiary sanctions based on this conduct. The district court did not violate due process. Orion and Spangenberg had suffjcient notice regarding potential sanctions from Chrysler and Mercedes’s motions in limine and the evidentiary hearing on the issue. Orion and Spangenberg had an opportunity to be heard when they argued against sanctions and the district court discussed the issue with the parties at the evidentiary hearing. The district court did not abuse its discretion in imposing sanctions where Spangenberg failed to erect an appropriate wall to preclude access to confidential information that Anderson had from working for Chrysler. Moreover, Orion and Spangenberg’s argument that contact with Chrysler’s witness was required by ethical obligations was unpersuasive. The ethical obligation to dissuade a client from potential perjury only applied to lawyers representing clients in a tribunal. Anderson was not representing Orion

• r Spangenberg in the Breach of Warranty Suit and had

no obligation under the professional conduct rule. Thus, the district court did not abuse its discretion in imposing evidentiary sanctions against Orion and Spangenberg. To read the full opinion, click here. Monolithic Power Systems, Inc., et al. v. O2 Micro International Ltd.

• No. 2012-1221

(Fed. Cir. August 13, 2013) Opinion by Circuit Judge Prost In Monolithic Power Systems, Inc. v. O2 Micro International Ltd., the Federal Circuit affjrmed the district court’s decision fjnding this case exceptional under 35 U.S.C. § 285 and awarding attorney fees to Monolithic Power Systems, Inc. (MPS). MPS and O2 Micro are competitors in the market for LED lighting controller circuits. In 2008, MPS fjled a declaratory judgment action against O2 Micro for noninfringement and invalidity with respect to four O2 Micro patents. O2 Micro fjled a complaint regarding the same patents at the International Trade Commission (ITC). The district court denied a motion to stay, but ordered that all discovery in the ITC apply in the district court action. During the district court proceeding, O2 Micro provided a schematic printout as evidence of a February 1998 conception date, but MPS’s schematic expert proved that the schematic had been manually backdated. The district court agreed with MPS’s expert, and soon after, O2 Micro fjled a covenant not to sue and moved to dismiss the case. In fact, O2 Micro and MPS have been embroiled in a series of litigation with the current case being the fjfth one, and O2 Micro has repeatedly used the same tactic of granting a covenant not to sue and moving to dismiss once the case becomes unfavorable to it.

Page 10

The district court dismissed the case with prejudice and awarded MPS approximately $8.5 million in attorney fees and costs, fjnding this case exceptional based on O2 Micro’s litigation misconduct and unprofessional behavior. The district court explained that O2 Micro withdrew its claims

• nly after substantial litigation had taken place, causing a

waste of substantial resources; they had also made various misrepresentations concerning the date of the schematic

• printout. A bulk of the awarded attorney fees was incurred

during discovery in the ITC investigation, but the district court justifjed including this fee in the awarded attorney fees because O2 Micro had known that the ITC discovery would apply in the district court action, and it acknowledged that there was a signifjcant overlap of issues between the two proceedings. The Federal Circuit held that the district court did not err in fjnding this case exceptional based on O2 Micro’s litigation misconduct without making a fjnding of “bad faith.” The Federal Circuit noted that litigation misconduct and unprofessional behavior can suffjce, by themselves, to make a case exceptional, and no additional fjnding of “bad faith” or “objectively baseless” litigation is required. The Federal Circuit further explained that O2 Micro engaged in litigation misconduct by its “modus operandi” of moving to dismiss the case by a unilateral covenant not to sue once the case starts going south, and in this time, only after the parties fjled fjnal pretrial submissions, causing a waste of substantial resources. The Federal Circuit also noted that O2 Micro’s misrepresentation concerning the schematic’s date constituted unprofessional behavior. The Federal Circuit found that the district court did not abuse its discretion in awarding MPS the attorney fees incurred during discovery in the ITC investigation. O2 Micro argued, relying on a recent Supreme Court case, that the award of attorney fees under the exception clause should be limited to those fees that would not have been incurred but for the acts of misconduct, and since the discovery expense in this case would have been incurred regardless

• f the misconduct, it should not have been awarded. The

Federal Circuit distinguished the current case from the Supreme Court case as the latter involved the allocation of fees between frivolous and nonfrivolous claims in a single lawsuit, whereas the former involves the allocation of fees in two separate, parallel proceedings, neither of which involves a frivolous claim. The Federal Circuit then concluded that, in view of the application of the ITC discovery in the district court action and the parties’ agreement to its dual use, the district court did not abuse its discretion in including the ITC discovery expense in the recoverable attorney fees. To read the full opinion, click here. 3M Innovative Properties Co., et al. v. Tredegar Corp.

• No. 2012-1241

(Fed. Cir. August 13, 2013) Opinion by Circuit Judge Reyna In 3M Innovative Properties Co. v. Tredegar Corp., the Federal Circuit addressed the Minnesota District Court’s claim constructions with regard to four disputed claim

• terms. For two of the disputed claim terms, the Federal

Circuit affjrmed the lower court’s construction but corrected analytical errors regarding the scope of one of those terms. For the other two disputed claim terms, the Federal Circuit vacated the lower court’s constructions. The four patents-in-suit concerned the elastomeric fjlm found in body-hugging areas of certain products, such as the side tabs of disposable diapers. The patents addressed problems due to the infmexibility of materials used in the prior

• art. The claims disclosed fjlms that expand when stretched

but recover their shape once stretching is complete. Keys to the inventions were the internal core and surrounding skin layers of the fjlms and the micro-texturing created by folds between those layers when stretched. The two Krueger patents claimed a laminate fjlm with “continuous” micro- texturing over the laminate’s skin layer. The two Hanschen patents claimed a laminate fjlm in which the stretching portions of the skin layer are limited to “preferential activation zones,” with the adjacent regions of the skin layer remaining inelastic. After claim construction in the district court, the parties stipulated to non-infringement. On appeal, the Federal Circuit resolved multiple claim construction disputes. First, the Court found that the district court improperly narrowed the meaning of the term “continuous contact” because the patentee had amended it from “substantially continuous contact” during prosecution. The parties disputed whether the fjlm layers exhibiting a certain type of failure, called “cohesive failure,” could be considered to be in “continuous contact.” Cohesive failure occurs when folds in the skin layer pull material away from the core layer so that the two distinct materials remain physically adhered, but with space created beneath the folds due to cracking within the core layer itself. The district court reasoned that by removing the word “substantially” from the claims, the patentee had surrendered any contact short of “full surface” contact, so fjlm exhibiting cohesive failure would be excluded. The Federal Circuit ruled that this was error because the amendment during prosecution was not a “clear and unmistakable” disavowal of cohesive failure, and the patent’s written disclosure expressly described the cohesive failure embodiment as one variation of “continuous contact.” There was no basis, therefore, for not giving “continuous

Page 11

contact” its plain and ordinary meaning, which would not exclude fjlm layers exhibiting cohesive failure. The Federal Circuit affjrmed the district court’s construction—defjning “continuous contact” as “full surface contact”—but clarifjed that the defjnition must include cohesive failure. Second, the district court construed “continuous microtextured skin layer over substantially the entire laminate” to require the microtexturing, rather than just the skin layer, to be substantially “continuous” across “substantially the entire surface of the skin layer,” and the Federal Circuit affjrmed. Pointing to The Chicago Manual

• f Style for guidance, 3M argued that “continuous” modifjed
• nly “skin layer,” not “microtexturing,” so that the skin layer
• nly needed microtexturing in at least one single region. The

Federal Circuit rejected this approach because it did not fjrst consider how a skilled artisan would understand the term in context of the patent. Even if, as 3M argued, the phrase “continuously microtextured” would have better indicated that microtexturing was required over the entire laminate, a skilled artisan would understand from the written description that the microtexturing had to cover substantially the entire skin layer rather than be restricted to a single region. Third, the district court incorrectly construed the term “preferential activation zone” to require that the areas

• f the laminate fjlm that preferentially elongate to be both

“predetermined” and “identifjable.” The district court relied

• n statements made by an examiner during reexamination

suggesting that he understood the claim term to be narrower in scope than the plain meaning of the claims and statements in the written description would otherwise allow. This contrasted with statements made by the patentee during the original prosecution defjning “preferential activation zone” broadly in a manner consistent with the claim

• language. On review, the Federal Circuit was “hesitant

to rely too heavily on examiner statements over those of the patentee” and explained that “claim construction is not decided based on isolated statements of one skilled in the art.” The Federal Circuit reasoned that because the language in the claim itself provided context for ascertaining the defjnition of “preferential activation zone,” that defjnition should control “unless a narrower construction is required by the specification or prosecution history.” Because Tredegar provided no evidence of a disclaimer by 3M in the prosecution history, the district court erred in not deferring to the plain meaning of the claim language and the statements made in the written description. The Federal Circuit thus construed “preferential activation zone” to mean “selected area[s] of the multi-layer laminate which, when stretched will elongate to form an elastic zone before or to a greater extent than other areas of the laminate.” Fourth, the district court erred by construing the term “ribbon” to mean “a strip of fjlm having a width of no more than one inch” even though the words of the claim and the written description were silent as to dimensions of the ribbon. Tredegar argued that without a width limitation the claims at issue would be “indefjnite, so that the court should look to the prior art to provide such a limitation and cure “ribbon” of its vagueness. The district court adopted Tredegar’s approach. The Federal Circuit held that the court had misapplied the “indefjniteness” concept, which applies when “reasonable efforts at claim construction must result in a defjnition that does not provide suffjcient particularity or clarity to inform a skilled artisan of the bounds of the claim.” The district court also violated “claim construction standards” by “exploring tangential prior art references to understand the meaning of the claims.” Because the ordinary usage of “ribbon” comported with its usage in the patent language, it was error to impose an artifjcial width requirement. The Federal Circuit construed the term simply as a “strip of fjlm.” To read the full opinion, click here. The aforementioned patent and trademark case summaries were provided by Morrison & Foerster. Contributing authors: Kristin Yohannan, inclusively; Julie

• A. Nicholson, Ashley Boyoung Yeum, and Daniel A. Zlantik,

respectively. Apple Inc. v. Samsung Electronics Co., Ltd., et al.

• Nos. 2012, 1600, 2013-1146

(Fed. Cir. August 23, 2013) Opinion by Judge Prost In Apple, the Federal Circuit reversed the district court’s pre- and post-trial orders denying the parties’ motions to seal confjdential exhibits, concluding that the district court applied the incorrect legal standard to documents attached to non-dispositive motions and that, in any event, the parties had shown “compelling reasons” suffjcient to overcome the public’s interest in disclosure. Judge Prost wrote the unanimous opinion. Apple brought suit against Samsung alleging infringement of several patents and trade dress embodied in smartphones and tablet computers,. Samsung then fjled counterclaims alleging patent infringement by Apple. This litigation aroused extraordinary attention from the media and the district court granted broad access to the press throughout the proceedings. Apple and Samsung filed numerous pre-trial motions accompanied by unopposed administrative motions to seal confjdential exhibits, including documents containing product-specifjc fjnancial data. After the district court denied

Page 12

these motions without prejudice, the parties submitted revised motions supported by declarations detailing the measures taken to maintain confjdentiality as well as the competitive harms that would result from disclosure of these documents. The parties also fjled a joint stipulation agreeing, inter alia, to disclose certain fjnancial information necessary to damages calculations at trial and not to challenge the suffjciency of the evidence introduced in support of one another’s damages calculations. In its pre-trial order granting-in-part and denying- in-part these renewed motions (“August Order”), the district court concluded that Apple and Samsung failed to articulate “compelling reasons” that justifjed sealing documents containing their fjnancial information. According to the district court, the parties failed to establish critical assumptions supporting their claims of competitive harm and did not establish how past profjt and sales data could be used to predict future business plans. By contrast, the court found that the public’s interest in disclosure of this data was “substantial” because it was “essential to each party’s damages calculations.” The district court therefore ordered this information unsealed, but stayed its order pending appeal. After a jury verdict substantially in Apple’s favor, Samsung moved to seal Apple market research reports lodged with its opposition to Apple’s motion for a permanent injunction and enhanced damages. Apple submitted a supporting declaration describing the measures employed to maintain the confjdentiality of these reports as well as the advantages competitors would obtain from their disclosure. In a post-trial order (“November Order”), the district court concluded that Apple had not shown “compelling reasons” to seal these reports. According to the district court, Apple specifjcally failed to show that Samsung could not replicate the reports’ analysis and, moreover, competitors could infer Apple’s business plans by observing market data. The district court ordered these exhibits unsealed, but stayed this order pending appeal. Apple and Samsung appealed the August Order, and Apple appealed the November Order, but neither party

• pposed the other’s requested relief. The Federal Circuit fjrst

considered whether it had jurisdiction to hear these appeals under the collateral order doctrine. Applying the three-factor test stated in Cohen v. Benefjcial Indus. Loan Corp., 337 U.S. 541 (1949), the Federal Circuit concluded that the district court’s orders fell within the “narrow exception” to the fjnal judgment rule because (1) they conclusively determined that the confjdential information would be made public; (2) they addressed an important issue –the propriety of sealing court documents – that was separate from the merits; and (3) they could not be reviewed once the parties’ confjdential information had been disclosed. Turning to the merits, the Federal Circuit held that the district court erred by requiring the parties to show “compelling reasons” to seal documents attached to non- dispositive motions. For dispositive motions, the Ninth Circuit requires a showing of “sufficiently compelling reasons,” such as competitive harm, to overcome the “strong presumption in favor of access to court records.” However, confjdential materials attached to non-dispositive motions may be sealed on a particularized showing of “good cause” under Federal Rule 26(c). Because many of the pre-trial motions underlying the August Order involved evidentiary issues, the Federal Circuit concluded that the district court’s failure to apply the “good cause” standard was legal error. The court further concluded that, regardless of the error, the parties met the more restrictive “compelling reasons” standard for all of the materials addressed on appeal. With respect to the August Order, Apple and Samsung argued that the district court abused its discretion in refusing to seal their confjdential fjnancial information, which they equated with trade secrets. Apple and Samsung further argued that the public did not require access to the detailed information contained in the underlying documents because they had stipulated to rely only on less-detailed fjnancial data to prove damages at trial. In response, amicus curiae The First Amendment Coalition claimed a strong public interest in disclosure, citing the case’s impact on the companies and associated fjnancial risks for shareholders. Balancing the interests that Apple and Samsung asserted in sealing their fjnancial information against the public’s interest in disclosure, the Federal Circuit concluded that the district erred by refusing to seal the parties’ fjnancial

• information. Although the Federal Circuit declined to decide

whether this information qualifjed as trade secrets, the court found that suppliers could use confjdential profjt, cost, and margin data to extract benefjts in contract negotiations, thereby placing Apple and Samsung at a competitive disadvantage. At once, the Federal Circuit found that the public had little interest in the information at issue, observing that the parties sought to seal only limited portions of documents containing the most sensitive fjnancial information, that they agreed to rely on less-detailed information at trial, and that none of the underlying documents had been offered into evidence. Rejecting the argument of the amicus curiae, the court noted that shareholder and consumer interests in manufacturing and pricing decisions were irrelevant to the balancing test. Accordingly, the Federal Circuit concluded that the district court abused its discretion in the August Order. With respect to the November Order, Apple argued that the district court had abused its discretion in refusing to seal nine market research reports, and the Federal Circuit

• agreed. The court found that these reports contained

Page 13

that Hamilton Beach could make into a binding contract for sale by simple acceptance. The Federal Circuit also rejected Hamilton Beach’s argument that the claimed invention was not ready for patenting. Hamilton Beach contended that it was not able to perfect the invention until several months after the critical date, but the court concluded that the invention was nonetheless ready for patenting because Hamilton Beach’s engineers created a working prototype of the invention before the critical date, and had created CAD drawings, made presentations, and had other communications with its supplier that, taken together, were suffjciently precise to enable a person of ordinary skill to build the invention. To read the full opinion click here. Aevoe Corp. v. AE Tech. Co. et al.

• No. 2012-1422

(Fed. Cir. August 29, 2013) Opinion by Judge O’Malley In Aevoe, the Federal Circuit dismissed an appeal

• f a modifjed injunction for lack of jurisdiction, fjnding

that the modifjed injunction merely interpreted the original injunction, and that the time to appeal the original injunction had run. The district court originally granted a preliminary injunction against AE Tech Co. Ltd. (AE Tech) in January 2012, prohibiting AE Tech from selling a touch screen protector that was held to infringe a patent owned by Aevoe

• Corp. AE Tech was entitled to immediately appeal that

injunction as an order “granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve

• r modify injunctions.” 28 U.S.C. § 1292(a)(1). Under the

Federal Rules of Appellate Procedure, AE Tech had 30 days to fjle that appeal. Fed. R. App. Proc. 4(a)(1). AE Tech, however, did not appeal the January order. In May 2012, the district court concluded that AE Tech had violated the injunction with an alleged redesign. At that time, the court altered certain language in the injunction, stating that it also applies to any “colorable imitation” of the infringing touch screen protector. AE Tech appealed this further order, arguing that it was an appealable “modifjcation”

• f the existing injunction under 28 U.S.C. § 1292(a)(1). The

Federal Circuit disagreed, and held that the district court merely “clarifjed” the scope of the original injunction in its May 2012 order, and that there was “no modifjcation that substantially changed the legal relationship between the parties.” Based on that fjnding, the Federal Circuit dismissed the appeal for lack of jurisdiction. The Federal Circuit also considered whether the addition of AE Tech’s distributor (the “S&F Defendants”) to information that Apple’s competitors could not obtain anywhere else and that the district court’s reasoning failed to appreciate that publicly available market data did not reveal future product releases or marketing strategies. Noting that Apple had agreed to make public all information actually cited by the parties or the district court, the Federal Circuit concluded that other information in the reports was irrelevant to the public’s understanding of the case and that “mere curiosity about the parties’ confjdential information” could not support disclosure “where that information is not central to a decision on the merits.” The Federal Circuit therefore reversed and remanded. To read the full opinion, click here. Hamilton Beach Brands, Inc. v. Sunbeam Products, Inc.

• No. 2012-1581

(Fed. Cir. August 14, 2013) Opinion by Judge O’Malley In Hamilton Beach, the Federal Circuit affjrmed the district court’s grant of summary judgment that Hamilton Beach’s patent on its “Stay or Go” slow cooker was invalid under the on-sale bar. Hamilton Beach sued Sunbeam, one of its primary competitors in the market for small kitchen appliances, after Hamilton Beach was able to use a pending continuation application to obtain claims covering Sunbeam’s attempt to design around Hamilton Beach’s earlier-issued patent. While the parties disputed the effective fjling date to which Hamilton Beach’s asserted claims were entitled, the Federal Circuit held that the dispute was immaterial because an embodiment of Hamilton Beach’s asserted claims was the subject of a commercial offer for sale more than one year before the earliest possible effective fjling date, i.e., before the earliest alleged “critical date.” Specifjcally, Hamilton Beach issued a purchase

• rder to its foreign supplier for manufacture of Stay or Go

slow cookers. A few weeks later—and still more than a year before the earliest possible effective fjling date for the asserted claims—the supplier confjrmed that it had received the purchase order and would begin production after receiving Hamilton Beach’s “release,” i.e., its review and approval of the fjnal product, as was contractually required before the supplier was permitted to ship product. Hamilton Beach argued that this “release” did not occur until after the critical date, and thus there could be no invalidating offer for sale. The Federal Circuit disagreed, holding that the supplier’s response that it was ready to fulfjll the order upon Hamilton Beach’s “release” was an offer for sale for purposes

• f 35 U.S.C. § 102(b)’s on-sale bar because it was an offer

Page 14

Mass offjcials. The offjcials moved to dismiss the revised complaint on the grounds that the case was still within the Supreme Court’s original and exclusive jurisdiction because

• U. Mass was a real party in interest, that U. Utah’s claims

were barred by sovereign immunity, and that U. Utah failed to name U. Mass as an indispensable party. The district court denied the motion, and the defendants appealed. The Federal Circuit observed at the outset that state universities typically enjoy sovereign immunity and generally may not be sued for patent infringement or forced to defend the validity or infringement of any assigned patent in a declaratory judgment action. This case required the Court to examine the legal complexities that arise when state universities are opposite one another in a patent dispute. The Federal Circuit fjrst noted that the complaint, at least on its face, presented a dispute between U. Utah and citizens of Massachusetts, which appeared to compel the Supreme Court’s original but not exclusive jurisdiction under 28 U.S.C. § 1251(b)(3). The Federal Circuit further noted that the Supreme Court maintained original and exclusive jurisdiction under Section 1251(a) if U. Mass was the real party in interest. Addressing the Second Circuit’s guidance in a split decision upon which the district court relied and also taking a wider view of the Supreme Court’s existing caselaw, the Federal Circuit determined that a state has no “core sovereign interests” in inventorship, that an order by the district court will not require or restrain U. Mass from acting, and that the district court was fully capable of granting the relief U. Utah requested without U. Mass’s presence in the

• suit. While certain of U. Mass’s interests may be affected

by the district court’s decision, the Federal Circuit stated that the district court’s order would not deplete the state treasury, compel U. Mass to act, or instruct U. Mass on how to comply with state law. The Federal Circuit thus concluded that U. Mass was not a real party in interest and that the suit therefore was not a confmict between states that was subject to the Supreme Court’s original and exclusive jurisdiction. The Federal Circuit also affjrmed the district court’s conclusion that U. Mass was not an indispensable party and that its absence from the suit did not require dismissal under

• Fed. R. Civ. P. 19(b). The Court noted that patent owners are

not automatically indispensable parties under the Rule and agreed with the district court’s consideration of the Rule 19(b) factors—that U. Mass’s interests were adequately represented by the named defendants, that an order directing the U.S. Patent and Trademark Offjce to correct inventorship would not be insuffjcient in the absence of U. Mass from the suit, etc. Judge Moore dissented. Characterizing the dispute at issue as one “between two state universities over who owns a valuable patent portfolio,” she criticized the majority’s “core sovereign interests” test as being at odds with the the May order constituted a modifjcation of the injunction. The S&F Defendants were not joined as defendants until March 2012, but were on notice of the January injunction within a week of its original issuance. Because the original injunction was directed to “any party that had notice of the injunction and was selling the barred products,” the Federal Circuit concluded that it was “beyond debate” that the S&F Defendants fell within the express language of the original

• injunction. Thus, the Federal Circuit held, the addition of

the S&F Defendants to the new injunction merely clarifjed and did not modify the original injunction. Accordingly, the Federal Circuit concluded that there was also no jurisdiction

• ver an appeal from the S&F Defendants.

To read the full opinion click here. The aforementioned patent and trademark case summaries were provided by Munger, Tolles, & Olsen. Contributing authors: Gregory Stone, Keith Hamilton, Adam Lawton, and Peter Gratzinger, inclusively. University of Utah v. Max-Planck-Gesellschaft Zur Forderung Der Wissenschaften E.V. et al.

• No. 2012-1540, -1541, -1661

(Fed. Cir. August 19, 2013) Opinion by Circuit Judge Reyna The Federal Circuit affjrmed the district court’s ruling that a dispute over patent inventorship between the University of Utah (“U. Utah”) and offjcials from the University of Massachusetts (“U. Mass”) was not a confmict between states that was subject to the Supreme Court’s

• riginal and exclusive jurisdiction under 28 U.S.C. § 1251(a).

The Federal Circuit also affjrmed the district court’s fjnding that U. Mass was not an indispensable party under Fed. R.

• Civ. P. 19(b) and that U. Mass’s absence from the suit did

not require its dismissal. The underlying dispute concerned the proper inventorship of patents covering RNA interference (“RNAi”)

• technology. U. Utah believed that one of its professors, who

by contract assigned to U. Utah all patent rights arising from her work, was the sole or joint inventor of the technology. A

• U. Mass researcher, however, applied for and was granted the
• patents. U. Utah initially brought suit in district court against

the assignees of the patents, including U. Mass, and sought among other things the correction of inventorship under 35 U.S.C. § 256. U. Mass moved to dismiss the complaint, arguing that the dispute between U. Utah and U. Mass was a confmict between states that was within the exclusive and

• riginal jurisdiction of the Supreme Court and thus was

improperly brought in district court. U. Utah subsequently amended its complaint by replacing U. Mass with four U.

Page 15

under Federal Rule of Evidence 702 because nothing in the record established the reliability of the testing methodology that he testifjed to at trial. The court also granted judgment as a matter of law that JJVC did not infringe as Dr. Beebe’s stricken testimony was the only evidence that Rembrandt advanced at trial to prove infringement by the accused lenses. Following Eleventh Circuit law, Judge Moore, writing for the panel, held the failure of Dr. Bebe to disclose the testing methodology he actually employed until cross- examination at trial was not harmless, violated Rule 26 of the Federal Rules of Civil Procedure governing the required content of expert reports, and thus exclusion was warranted. JJVC prepared its noninfringement defense based on the Shore D Testing methodology disclosed in Dr. Bebe’s expert

• report. JJVC opted to challenge that methodology rather

than introduce competing expert testimony. Nothing during the litigation alerted JJVC to the possibility that Dr. Bebe would alter his testimony, and his changed testimony was both substantive and substantial. To read the full opinion, click here. Leo Pharmaceutical Products, Ltd. v. Teresa Stanek Rea, Acting Director, U.S. Patent & Trademark Offjce

• No. 2012-1520

(Fed. Cir. August. 12, 2013) Opinion by Chief Judge Rader The Federal Circuit reversed the Patent and Trademark Offjce’s Board of Patent Appeals and Interferences’ (“BPAI’s”) fjnding that Leo Pharmaceutical’s U.S. Patent No. 6,753,013 (“the ’013 patent”) covering the “storage stable and non-aqueous” combination of vitamin D, corticosteroid, and a solvent, such as polyoxypropylene 15 stearyl ether (“POP– 15–SE”), for the topical treatment of skin conditions, such as psoriasis, was obvious over three prior art references: U.S. Patent No. 4,083,974 (“Turi”); U.S. Patent No. 4,610,978 (“Dikstein”); and WO 94/13353 (“Serup”). The Court further reversed the BPAI’s fjnding that the “unexpected results” claimed by Leo Pharmaceuticals were not unexpected because Turi “provided explicit reason to use POP–15–SE as a solvent” to those of ordinary skill in the art. Before the ’013 patent, vitamin D and corticosteroid could not be combined in a topical cream due to their divergent pH requirements for

• ptimum stability in a non-aqueous composition.

Turi, fjled in 1977, discloses pharmaceutical compositions comprising a steroid contained within the POP–15–SE solvent, but it does not teach the using vitamin D or POP–15–SE as a solvent to allow “vitamin D and corticosteroid to coexist.” Dikstein, fjled in 1984, discloses dermatological compositions, including creams,

• intments, and lotions, comprising a vitamin D analog and

placement in Section 1251(a) of “all controversies” between states within the Supreme Court’s original and exclusive

• jurisdiction. She disagreed with the majority’s assertion that

an order by the district court would not require or restrain U. Mass from acting, noting instead that a judgment in favor

• f U. Utah will prevent U. Mass from exploiting the patents

and the claimed technology. Judge Moore also stated that

• U. Mass was an indispensable party in the suit because its

interests were not identical to those of the named defendants, citing the possibility that the named defendants might settle with U. Utah in a manner that reduces U. Mass’s rights. To read the full opinion, click here. The aforementioned patent and trademark case summary was provided by Jones Day. Contributing authors: Richard

• J. Johnson and Daniel T. O’Brien.

Rembrandt Vision Technologies, L.P. v. Johnson & Johnson Vision Care, Inc.

• No. 2012-1510

(Fed. Cir. August 7, 2013) Opinion by Circuit Judge Moore The Federal Circuit affjrmed (1) the district court’s exclusion of the plaintiff’s, i.e., Rembrandt’s, expert’s trial testimony regarding his fjndings on defendant’s, i.e., Johnson & Johnson Vision Care’s (“JJVC’s”), accused contact lenses and (2) the district court’s JMOL ruling of non-infringement. The district court adopted the parties’ agreed construction of “soft gas permeable contact lens” as “a contact lens having a Hardness (Shore D) less than fjve.” To prove that JJVC’s accused contact lenses had a Shore D Hardness of less than fjve, plaintiff’s expert, Dr. Thomas Bebe, Jr., provided an expert report that indicated he performed a Shore D Hardness test by stacking 24 of the accused lenses around a stainless steel ball and then probing the lenses to 2.54mm in thickness. He confjrmed during his direct examination at trial that he performed the steel ball test. On cross-examination, Dr. Bebe testifjed he did not follow the testing procedures as

• utlined in his expert report. He testifjed he performed the

Shore D Hardness testing by cutting the accused lenses into quarters, stacking the lens quarters on a fmat surface, and then probing them to at least 6mm in thickness in conformance with industry standards for Shore D Hardness testing. These procedures were not disclosed in Dr. Bebe’s expert report.

• Dr. Bebe claimed his expert report’s disclosure of the wrong

Shore D Hardness test procedure was a “typo. The district court struck Dr. Beebe’s testimony under Federal Rules of Civil Procedure 26 and 37 because his expert report was “woefully defjcient” to support his trial

• testimony. The court also excluded Dr. Beebe’s testimony

Page 16

TT from asserting the ’055 patent against software products that include certain display functions. The district court premised both holdings on deference to the Federal Circuit’s prior decision in Trading Technologies International, Inc. v. eSpeed, Inc., 595 F.3d 1340 (Fed. Cir. 2010) (“eSpeed”), which considered two related patents from TT’s portfolio, including U.S. Patent 6,772,132 (the “’132 patent”). Judge Lourie concluded eSpeed does not control the issues presented in this appeal, and the district court’s rulings based

• n that case were incorrect.

The ’411, ’768, ’374, and ’055 patents disclose software used for electronic trading on a commodities exchange and claim priority to the ’132 patent. The ’411, ’768, and ’374 patents all arose from a series of continuation applications stemming from the parent ’132 patent and share a common written description with the ’132 patent. The ’055 patent however issued from a continuation-in-part application and contains “substantial new matter” relative to the original written description of the ’132 patent. In eSpeed, TT argued the claim term “static display” of vertical commodities prices in the claims of the ’132 patent could be automatically re-centered. The Federal Circuit disagreed and adopted the district court’s construction of the term as “a display of prices comprising price levels that do not change positions unless a manual re- centering command is received,” based on the disclosures in the patent’s specifjcation and fjle history. The claims and specifjcation reveal the static display does not move and is re-centered only in response to a manual mouse click on the screen. The applicant moreover argued the same in the prosecution history in response to an indefjniteness rejection from the PTO. Subsequently, TT removed the term “static” from the claims of the then pending patent applications for the ’411, ’768, and ’374 patents. Therefore, unlike the ’132 patent at issue in eSpeed, the ’411, ’768, and ’374 patents claim trading methods and software without limitation to a “static” price column display. The continuation-in-part application of the ’055 patent added new matter to the specification that disclosed the static display is “movable” by, for example, “automatically centering” the display with respect to a static axis (“A trader may use automatic positioning to always have a visual reference of where the market is trading . . . . In addition, automatic positioning may be used in conjunction with manual positioning.” ’055 patent col. 26 ll. 30–37). The claims of the ’055 patent likewise recite steps that include displaying “a static price axis” and “automatically repositioning the static price axis on the graphical user interface.” Id. col. 34 ll. 15–67. By their terms, the claims

• f the ’055 patent thus require a “static price axis” capable
• f re-centering via automatic, versus manual, commands.

Instead of considering TT’s removal of the term a corticosteroid. Dikstein teaches that vitamin D can treat psoriasis and that corticosteroids have side effects, but it does not teach using vitamin D to treat the side effects of

• corticosteroids. Serup, fjled in 1993, describes a composition

containing a vitamin D analog and a steroid. Serup further teaches the use of vitamin D analogs to treat skin atrophy, a well-known side effect of steroid treatment. Serup does not address any storage stability concerns associated with this combination, and its example compositions are all

• aqueous. Even though the BPAI found that Turi did not

teach using POP–15–SE as a solvent to allow “vitamin D and corticosteroid to coexist,” the Board nonetheless concluded that “the reason for utilizing the solvent does not have to be the same reason [the solvent] was employed by the inventors.” Chief Judge Rader, writing for the panel, opined that the claims of the ’013 patent were not obvious in view of the fact the prior art did not solve the storage stability problem of vitamin D and corticosteroids, a problem the prior art did not recognize and was not solved for over a decade after the last relevant prior art reference was published; rather, the prior art consistently taught away from claimed invention. He further wrote that where the prior art, at best, gives only general guidance as to the particular form of the claimed invention

• r how to achieve it, relying on an obvious-to-try theory

to support an obviousness fjnding is impermissible. The patent’s objective indicia of nonobviousness weighed against a fjnding that the ’013 patent was invalid for obviousness, where unexpected results showed that the claimed storage stability of the non-aqueous combination of vitamin D, corticosteroid, and POP–15–SE were much greater the prior art predicted, the patent holder’s ointment was the fjrst FDA- approved drug to combine vitamin D and corticosteroids into a single formulation for topical application, and decades passed between the publication dates of the prior art and the claimed invention. To read the full opinion, click here. Trading Technologies Int’l, Inc. v. Open E Cry, LLC

• No. 2012-1583

(Fed. Cir. August. 30, 2013) Opinion by Circuit Judge Lourie The Federal Circuit, in an opinion written by Circuit Judge Lourie, reversed and remanded the district court’s summary judgment that (i) the asserted claims of Trading Technologies’ (“TT’s”) U.S. Patents 7,676,411 (the “’411 patent”), 7,693,768 (the “’768 patent”), 7,904,374 (the “’374 patent”), and 7,685,055 (the “’055 patent”) are invalid for failure to comply with the written description requirement

• f 35 U.S.C. § 112; and (ii) prosecution history estoppel bars

Page 17

The Veterans Court disagreed with Kernea, fjnding that the Board of Veterans’ Appeals had properly determined that the governing regulation prohibited claims of “hypothetical entitlement” and that Kernea had not raised any specifjc claims of CUE. Kernea appealed. The U.S. Court of Appeals for the Federal Circuit acknowledged that that similar cases had already ruled that there was no “hypothetical entitlement” for DIC claims as the regulation banning them could be applied retroactively; however, this specifjc issue had not come before the circuit court as of yet. It continued that the Princess Cruises factors for whether a regulation could be applied retroactively should be applied here, as it had done in the similar cases. Addressing the fjrst Princess Cruises factor – the nature and extent of the change in the law – the circuit court found that the state of the law was in a time of fmux before Kernea applied for EDIC, but by the time Kernea had applied, the Federal Circuit had held that the VA could construe the statutory language to bar “hypothetical entitlement” claims. Thus, this factor weighed against Kernea. The second factor – the degree of connection between the operation of the new rule and a relevant past event – also weighed against Kernea. The Federal Circuit held that there was nothing Kernea would have done differently had she known of the effect of the rule that was fjnalized in 2005. With regard to the fjnal factor – familiar considerations of fair notice, reasonable reliance, and settled expectations – the circuit court also found that the weight was against Kernea. It noted that the state of the law was already against Kernea at the time that she fjled her claim, and she had no reason to believe that the law would suddenly change in her favor. Therefore, since all three Princess Cruises factors were against Kernea, the circuit court affjrmed the retroactive applicability of the regulation to her case and the Veterans Court’s denial on this basis. The circuit court also held that it did not have jurisdiction to hear Kernea’s CUE claims, as it was a factual issue. To read the full opinion, click here. National Organization of Veterans’ Advocates, Inc. v. Secretary of Veterans Affairs

• No. 11-7191

(Fed. Cir. August 5, 2013) Opinion by Circuit Judge Plager The National Organization of Veterans’ Advocates,

• Inc. (NOVA) petitioned the U.S. Court of Appeals for the

Federal Circuit on September 9, 2011, to review a rule promulgated by the Department of Veterans Affairs. While the petition was being reviewed, it became clear to all parties that the regulation had not been properly promulgated “static” from the claims of the ’411, ’768, and ’374 patents, the district court relied entirely on the eSpeed decision in granting summary judgment against TT. Accordingly, Judge Lourie opined the eSpeed decision did not apply and that remand was required for the district court to consider in the fjrst instance whether the claims drawn to a non-“static” display satisfjed the written description requirement. Regarding the ’055 patent, Judge Lourie ruled the new matter added to the specification and the new claim language warranted reversal of the district court’s summary judgment. He found the ’055 patent’s specifjcation adequately supported the patent’s claim language, and the district court erred by not considering the new matter and claims in its analysis. Moreover, Judge Lourie ruled the prosecution history estoppel from the ’132 patent did not apply to the ’055 patent due to the new matter added to the ’055 patent’s specifjcation and its subsequent new claims. To read the full opinion, click here. The aforementioned patent and trademark case summaries were provided by Winstron and Strawn, LLP. Contributing author: Peter J. Corcoran III.

Veterans Appeals

Kernea v. Shinseki

• No. 12-7142

(Fed. Cir. August 1, 2013) Opinion by Circuit Judge Prost Widow Flora L. Kernea (Kernea) appealed a decision by the U.S. Court of Appeals for Veterans Claims (Veterans Court), affjrming the denial of enhanced dependency and indemnity compensation (EDIC). Donald E. Kernea, Kernea’s husband, died on February 23, 1969, as a result of complications from his service-connected

• diabetes. At the time of his death, Mr. Kernea had been in

receipt of a 100% rating for diabetes for less than four years. Several months after Mr. Kernea’s death, Kernea applied for and was granted dependency and indemnity compensation (DIC). Thirty-four years later, Kernea applied for EDIC, which requires that the veteran was receiving a 100% rating for at least eight years prior to his death, or that he had been entitled to receive such compensation. Kernea argued that her husband had been “entitled to receive” a 100% rating for the last eight years of his life, that several rating decisions issued during Mr. Kernea’s lifetime contained clear and unmistakable error (CUE), and that she was entitled based

• n a “hypothetical entitlement” theory.

Page 18

• drug. Moreover, the Veterans Court held that Middleton’s

condition was not closer to the 40% rating, as he did not meet the actual requirements for a 40% rating. Middleton appealed, arguing that the term “insulin” should be more generally construed to a need for “insulin” and not that he needed to actually inject it. The Secretary disagreed, arguing that the plain language of the regulation should be controlling. The U.S. Court of Appeals for the Federal Circuit agreed with the Secretary. It stated the regulatory language was clear and that the VA knew how to specify if a certain drug was necessary. Moreover, the Federal Circuit held that this specifjc diagnostic code had successive, cumulative criteria that required that all of the criteria be met in order to obtain the higher rating. This was in contrast to other diagnostic codes, where a veteran could be potentially eligible for one or the other, and therefore 38 C.F.R. § 4.7 would apply. Therefore, the circuit court affjrmed the Veterans Court’s decision. To read the full opinion, click here. The aforementioned veterans appeals case summaries were provided by The Paralyzed Veterans of America. Contributing author: Linda Blauhut. and steps were supposedly taken by the VA to stop the enforcement of the regulation. However, it also became clear to the circuit court that the VA was not actually taking the proffered steps to stop the enforcement of the regulation. The Federal Circuit issued an

• rder to the Government to show cause why sanctions should

not be ordered, or in the alternative, for the Government to provide a plan explaining how it intended to rectify the problem and explain why sanctions would be unnecessary. In response, the Government provided a detailed remedial plan and requested that sanctions not be imposed. The plan stated that the VA would mail a notice to every affected claimant, would provide each affected claimant with a new hearing and the opportunity to submit new evidence, and would provide for a joint motion to remand if the prior Board decision had applied the illegal rule and the decision had been appealed to the U.S. Court of Appeals for Veterans Claims or the U.S. Court of Appeals for the Federal Circuit. The Federal Circuit and NOVA agreed that the plan was acceptable. Additionally, the circuit court held that sanctions were not necessary at this time but that it would retain jurisdiction of the matter until all harms to affected claimants have been remedied. To read the full opinion, click here. Middleton v. Shinseki

• No. 13-7014

(Fed. Cir. August 15, 2013) Opinion by Circuit Judge Lourie Birdeye L. Middleton (Middleton) appealed a decision by the U.S. Court of Appeals for Veterans Claims (Veterans Court), affjrming the denial of a rating in excess

• f 20% for service connection for diabetes.

Middleton honorably served for twenty-six years. He was granted service connection for diabetes mellitus in July 2002, and granted a 20% rating. In 2008, Middleton requested an increased rating, but the Regional Offjce denied this claim. Middleton appealed, and was provided with a Compensation & Pension examination in 2009. The examiner found Middleton was treated with three oral hypoglycemic agents and a daily injection of Byetta, which is not insulin. The Board of Veterans’ Appeals denied Middleton’s claim, fjnding that he did not meet the criteria for a 40% rating because he did not use insulin to regulate his diabetes. Middleton appealed, arguing that his Byetta injection was analogous to requiring insulin, and he should therefore be entitled to the higher rating. The Veterans Court disagreed, stating the plain language of the regulation required that the veteran inject “insulin” and not a substitute or analogous

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