The Sughrue Review December in the Federal Circuit QUALCOMM INC. V. - - PDF document

The Sughrue Review December in the Federal Circuit

Inside this issue: Qualcomm Inc. v. Broad- com Corp

1

Rentrop v. The Spectra- netics Corporation

1

Hyatt v. Director, Patent and Trademark Office

2

Ricoh Company Ltd. v. Quanta Computer Inc.

2- 3

Sundance Inc. v. Demonte Fabricating Ltd.

4

Rentrop, inventor of U.S. Patent No. 6,673,064 directed to an excimer laser catheter, sued Spectranetics for infringe-

• ment. Spectranetics asserted defenses including obvious-

ness and inequitable conduct, and counterclaimed to cor- rect inventorship. The jury found that the accused prod- ucts infringed the ’064 patent, that the ’064 patent was not invalid, and that Rentrop was the sole inventor of the ’064

• patent. The district court denied Spectranetics’ motion for

judgment as a matter of law on infringement and inequita- ble conduct. Spectranetics appealed. This summary will address two of the issues on appeal. Spectranetics argued: i) that the ’064 patent was so obvious based on the prior art presented to the jury that the only possible explanation for the jury not finding the claim to be

• bvious was that the district court gave a rigid “teaching,

suggestion or motivation” jury instruction in violation of the Supreme Court’s intervening decision in KSR; and ii) that the district court erred by not finding inequitable conduct based on Rentrop’s inadequate disclosure during prosecu- tion. On the first issue, the Federal Circuit noted that although post-trial briefing was completed over two months before KSR was decided, the district court did not decide the post- trial motions until almost four months after the decision in KSR. The Federal Circuit then held that when there is a relevant change in the law before entry of final judgment, a party must generally notify the district court; if a party fails to do so, it waives arguments on appeal that are based on that change in the law. Thus, Spectranetics waived its argument based on KSR. De- spite the waiver, the Federal Circuit commented that the jury instructions criticized by Spectranetics were appro- priate because--though given before KSR--the court in- structed the jury on the TSM principle in unrigid terms. On the second issue, Spectranetics argued that Ren- trop’s nondisclosure or inadequate disclosure of several items of prior art and his minimization of the role of Spectranetics in the invention was inequitable conduct. The district court determined that there was a low level

• f materiality and weak inference of intent. Therefore,

the Federal Circuit said that Spectranetics would need to provide compelling evidence of materiality and intent to deceive in order to reverse the district court’s rejec- tion of the inequitable conduct defense and that it had not done so. Thus, the judgment of the district court was affirmed

Volume 1, Issue 1

QUALCOMM INC. V. BROADCOM CORP.

Federal Circuit 2007-1545, 2008-1162 (December 1, 2008)

RENTROP v. THE SPECTRANETICS CORPORATION Federal Circuit 2007-1560 (December 18, 2008)

Qualcomm deals with the consequences of remaining silent when there is a duty to dis- close patents in a standards-setting organi- zation (“SSO”). Qualcomm did not disclose two patents to the Joint Video Team (“JVT”) SSO prior to the release of the H.264 stan- dard in May 2003. The issue in Qualcomm was “whether Qualcomm waived its right to assert its patents by failing to disclose them to the JVT SSO.” The Court found that many industry participants of SSOs attempt to avoid “patent hold-up,” which can occur when participants fail to disclose relevant intellectual property rights (“IPR”) to an SSO prior to a standard’s adoption, by requir- ing participants to reveal and/or give up IPR covering a standard. The Federal Cir- cuit affirmed the district court’s determi- nation that Qualcomm, as a participant in the JVT prior to the release of the stan- dard, did have IPR disclosure obligations under the written policies of both JVT and its parent organization. The Federal Cir- cuit, however, held that remedy of unen- forceability against the world was too broad, and remanded with instructions to enter an unenforceability remedy limited in scope to H.264-compliant products.

January 28, 2009

The Sughrue Review December in the Federal Circuit

RICOH COMPANY, LTD. V. QUANTA COMPUTER, INC.

Federal Circuit 2007-1567 (December 23, 2008)

and consequently, the summary judgment of noninfringement was vacated on two issues: (1) whether QCI, QSI, and QCA (collectively “Quanta”) contributorily infringed the ’552 and ’755 patents; and (2) whether QSI induced infringement

• f the ’552 and ’755 patents. The

remainder of the district court’s rulings were affirmed. Ricoh claimed that Quanta directly Ricoh appeals to the Court of Ap- peals for the Federal Circuit (“CAFC”) from a summary judgment dismissing all claims against Quanta Computer, Inc. (“QCI”), Quanta Storage, Inc. (“QSI”), Quanta Computer USA, Inc. (“QCA”), and NU Technology, Inc. (“NU”). The District Court for the Western District of Wisconsin on summary judgment ruled that: asserted claims

• f USP 6,631,109 (‘109 patent) are

invalid for obviousness; accused devices do not practice the methods

• f the asserted claims of USP

6,172,955 (‘955 patent); and Ricoh failed to present evidence sufficient to create a material issue of fact as to either direct or indirect infringement of USP 5,063,552 (‘552 patent) and USP 6,661,755 (‘755 patent) by Quanta. The Federal Circuit held that the district court applied erroneous legal standards,

HYATT V. DIRECTOR, PATENT AND TRADEMARK OFFICE

Federal Circuit 2007-1050, 1051, 1052 and 1053 (December 23, 2008)

“In this case, DeMonte had

failed to demonstrate any possible relevancy …”

Page 2

Federal Circuit disagreed with the Board, and held that a group of claims rejected under a particular statutory section do not share a common ground of rejection under section 1.192(c)(7), and USPTO is consequently not allowed to con- sider the group on the basis of a single representative claim unless the claims share a common limita- tion that fails under the statutory

• section. The Federal Circuit stated

that the PTO plainly erred in its in- terpretation of 1.192(c)(7), and the district court was thus correct to re- mand Hyatt’s appeals to the Board with instructions to regroup and re- consider Hyatt’s claims according to appropriate representative claims. The Federal Circuit stated, however, that the Board is free on remand to apply the rule of waiver to any grounds of rejection not contested by Hyatt in his initial appeals, pro- vided such grounds do not become relevant on remand due to realign- ment of the representative claims or

• ther aspects not previously at is-

sue. The USPTO appealed from a ruling in favor of Hyatt by the U.S. District Court for the District of Columbia (“DC”). Hyatt’s approximately 2400 claims in 12 related applications were rejected during prosecution, and the rejection was upheld by the Board of Patent Appeals and Inter- ferences (“Board”). The Board re- jected the 2400 claims based on 21 representative claims. Hyatt brought suit under 35 U.S.C. §145, arguing that the Board should have considered his claims separately, or alternatively, that the Board improp- erly selected the 21 claims in his Appeal Brief as representative of the 2400 claims. The Board countered that the selection of the 21 claims was proper because Hyatt failed to separately argue the other claims, and that all the claims were properly grouped because each group was rejected under the same statutory provision, such as lack of written

• description. The district court found

that, even though Hyatt failed to separately argue all of his claims, the Board had failed to comply with 37 C.F.R. § 1.192(c)(7) when select- ing the representative claims on which its review of the examiner’s rejection of groups of claims in Hyatt’s applications was based. The district court held that “the Board should not have grouped claims that have been rejected for lack of a writ- ten description unless those claims share a limitation that has been found to have not been disclosed by the specification.” The district court remanded the case to the Board with instructions to regroup and recon- sider Hyatt’s claims according to appropriate representative claims. Section 1.192(c)(7) provides, in part, that claims can be grouped together if they share a ground of rejection. The USPTO argued on appeal that “ground of rejection” refers simply to the statutory section under which a claim was rejected (for example, lack of written description), and as such, it can choose a claim rejected for failure to satisfy this requirement as representative of all claims re- jected for this reason—regardless of whether the limitation in the repre- sentative claim that lacks written description support is present in the non-representative claims. The

sidered: QSI’s product specification sheets; that QSI fine tunes the firm- ware used by the accused drives for writing to optical discs using Zone- CLV; a presentation that QSI gave to Dell; website instructions; and “the simple fact that defendant Quanta Storage ‘designs and sells’ the ac- cused devices,” the district court concluded that this evidence can establish that QSI “may have known that its customers would perform the patented methods,” but there was no evidence that Quanta encouraged infringement by its customers. The Federal Circuit held that the district court incorrectly applied the law of active inducement. It stated that as a threshold matter, active inducement requires a finding of direct infringement: “either a find- ing of specific instances of direct infringement or a finding that the accused products necessarily in- fringe.” Based on the record, this is a material issue of fact. The Federal Circuit stated that the issue is whether there is a material issue of fact as to Quanta’s intent that its drives be used to infringe the method claims of the ’552 and ’755

• patents. The district court erred to

the extent that it discounted Ricoh’s evidence of QSI’s intent as failing to present evidence that QSI communi- cated the nature of its actions to al- leged direct infringers. The District Court also erred in discounting evi- dence of a presentation made by QSI to Dell touting the advantages of the Quanta drives on the grounds that the presentation did not dis- close Ricoh’s claimed methods. Ri- coh’s position that the allegedly in- fringing functionality could be sepa- rated from the noninfringing func- tionality of the Quanta drives may thus be relevant to whether QSI had a specific intent to encourage an-

• ther’s infringement.

The Sughrue Review December in the Federal Circuit

infringed the patents through the sale or offer for sale of software that causes the accused drives to per- form the claimed methods under 35 USC §271(a). The Federal Circuit concluded as a matter of law that Quanta did not sell or offer to sell the invention because the actual carrying out of the instructions of software, not the software itself, is that which constitutes a process within the meaning of §271(a). That is, a party that sells or offers to sell software containing instruc- tions to perform a patented method does not infringe the patent under §271(a). Ricoh also argued that Quanta con- tributorily infringed its patents by selling optical disc drives adapted to perform the patented recording

• methods. The district ruled that

even though Quanta’s drives might be capable of being used to infringe Ricoh’s patented processes by writ- ing discs, there was no liability for contributory infringement because the drives were also capable of “substantial noninfringing use” within the meaning of §271(c) be- cause they could also be used to read discs in a noninfringing man- ner, even assuming that Quanta’s drives use separate hardware and embedded software modules to per- form the patented processes and those components had no nonin- fringing use. The Federal Circuit stated that, as- suming direct infringement is found, Quanta would be liable un- der §271(c) if it imported into or sold within the United States a bare component (say, a microcontroller containing routines to execute the patented methods) that had no use

• ther than practicing the methods
• f the ’552 and ’755 patents. Such a

component, specially adapted for use in the patented process and with no substantial noninfringing use, would plainly be “good for nothing else” but infringement of the pat- ented process. The Federal Circuit concluded that Quanta should not be permitted to escape liability as a contributory infringer merely by embedding that microcontroller in a larger product with some additional, separable feature before importing and selling it. The Federal Circuit stated that if they were to hold other- wise, then so long as the resulting product, as a whole, has a substan- tial non-infringing use based solely

• n the additional feature, no con-

tributory liability would exist de- spite the presence of a component that, if sold alone, plainly would in- cur liability. Thus, the district Court’s grant of summary judgment

• f no contributory infringement was

vacated, and the case remanded to the district court for further pro- ceedings on whether Quanta’s opti- cal disc drives contain hardware or software components that have no substantial noninfringing use other than to practice Ricoh’s claimed methods, in which case contributory infringement may appropriately be found. Ricoh additionally claimed that QSI actively induces infringement under 35 U.S.C. § 271(b), which states that “[w]hoever actively induces in- fringement of a patent shall be liable as an infringer.” Specifically, Ricoh claimed that QSI induced infringe- ment by its customers (e.g., Hewlett- Packard, Dell, and Gateway) as well as the end-users of the drives. The district granted summary judgment

• f no inducement on the grounds

that Ricoh had not presented evi- dence sufficient to create a material issue of fact as to whether QSI pos- sessed the requisite intent that the patents be infringed. Having con-

RICOH COMPANY, LTD. V. QUANTA COMPUTER, INC. (cont. from page 2)

Page 3

Volume 1, Issue 1

under Fed. R. Evid. 702. Indeed, where an issue calls for consideration of evidence from the perspective of one of

• rdinary skill in the art, it is contradictory to Rule 702 to

allow a witness to testify on the issue who is not qualified as a technical expert in that art. The Federal Circuit ac- knowledged that patent lawyers are often qualified to testify as technical experts, but stated that such a qualification must derive from a lawyer's technical qualifications in the pertinent art. In this case, De- Monte had failed to demonstrate any possible rele- vancy or reliability of the attorney’s testimony in light

• f his lack of relevant technical experience.

At the same time, the Federal Circuit determined that even without the testimony of DeMonte’s patent attorney expert, claim 1 of the ’109 patent was invalid because there were no underlying factual issues in dispute as to

• bviousness. The Federal Circuit said that the technol-
• gy was simple and that neither party claimed that ex-

pert testimony was required to support such a holding. The Federal Circuit criticized the district court’s misun- derstanding of a reference as “prior art outside of the truck environment which used segmented tarps,” and compared the disputed combination to the combination in KSR stating that the segmented truck cover claimed in the ’109 patent represents the “mere application of a known technique to a piece of prior art ready for the improvement.” The Federal Circuit also noted that the secondary considerations of nonobviousness, consid- ered by the district court, could not overcome the strong prima facie case of obviousness. Accordingly, the Federal Circuit held that the ‘109 patent is invalid for

• bviousness.

Sundance sued DeMonte for infringement of U.S. Pat- ent No. 5,026,109, directed to a segmented cover sys-

• tem. The jury found claim 1 infringed but invalid for
• bviousness. The court granted Sundance’s motion

for judgment as a matter of law (JMOL) that the ’109 patent was not invalid. DeMonte moved for reconsid- eration in light of KSR and moved for JMOL of nonin-

• fringement. The court denied both motions, and De-

Monte appealed. This summary will address two issues: 1) the district court’s admission of DeMonte’s expert witness testi- mony; and 2) the district court’s grant of the JMOL

• verturning the jury verdict of obviousness.

One of Demonte’s experts, a patent attorney, pre- pared an expert report on the issued of USPTO prac- tice and procedures, claim construction, noninfringe- ment, invalidity and inequitable conduct. Sundance filed a motion in limine to preclude the attorney’s tes- timony because he lacked the appropriate technical background in the field of the invention. Demonte conceded that the attorney did not have experience with the relevant technology but argued that his quali- fications would be an appropriate subject for cross- examination and would go to the weight of his testi-

• mony. The district court denied the motion and al-

lowed the attorney to testify. The Federal Circuit held that it is an abuse of discre- tion to permit a witness to testify as an expert on the issues of noninfringement or invalidity unless that wit- ness is qualified as an expert in the pertinent art. Tes- timony proffered by a witness lacking the relevant technical expertise fails the standard of admissibility

Editors

CARL PELLEGRINI

Carl Pellegrini specializes in intellectual property liti- gation and has represented clients in a wide variety of

• technologies. In addition,

Carl's practice includes pat- ent prosecution, infringe- ment and validity opinions, license negotia- tions and counseling clients on IP matters.

BRIAN HANNON

• Mr. Hannon advises cli-

ents in patent-related matters involving commu- nications and mechanical

• technology. His practice

includes rendering opin- ions on patentability, va- lidity and infringement issues, repre- senting clients in licensing, litigation and Federal Circuit appeals, and preparing and prosecuting patent applications. Phone: (202) 293-7060 E-mail: newsletter@sughrue.com Web address: www.sughrue.com Contributors to this edition: Jerrick Ho and Navid Fanaeian

SUNDANCE INC. v. DEMONTE FABRICATING LTD.

Federal Circuit 2008-1068, -1115 (December 24, 2008)

The Sughrue Review December in the Federal Circuit