IP Update, Volume 7, No. 10, October 2004
October 2004
Patents / Doctrine of Equivalents
On Remand from the U.S. Supreme Court, Insituform Finds Relief from Festo
By Paul Devinsky
In a case on remand from the U.S. Supreme Court, a three-judge panel of the U.S. Court of Appeals for the Federal Court struck its earlier decisions Insituform I, II and III, ruling the patent owner (Insituform) had successfully rebutted the Festo presumption barring use of the doctrine of equivalents. The panel held that while a narrowing amendment had been made, it bore “‘only a tangential relation,’ if that, ‘to the equivalent in question.’” Insituform Technologies, Inc. v. CAT Contracting, Inc. et al., Case Nos. 99-1584, 00-1005 (Fed. Cir. Oct. 4, 2004) (Shall, J.).
This case has now been to the Federal Circuit four times.
In Insituform I and II (1996 and 1998 respectively), the Federal Circuit ruled Insituform was not barred by prosecution history estoppel from asserting infringement under the doctrine of equivalents between the recited single cup for drawing a vacuum along a pipe liner and the accused process that used several cups or needles for the same purpose.
In Insituform III, (2001) the Federal Circuit, relying on its initial en banc Festo holding, Festo I, (2002) i.e., a narrowing amendment made for a reason related to patentability completely bars application of the doctrine of equivalents as to that limitation, reversed itself and held that based on a narrowing amendment that recited a single vacuum cup, Insituform was not entitled to assert any range of equivalents as to that limitation. After the Supreme Court overruled the complete bar rule of Festo I, holding the so-called “Festo presumption” against application of the doctrine of equivalents was subject to rebuttal, it vacated the decision in Insituform III and remanded the case to the Federal Circuit. Now, in Insituform IV, the Federal Circuit has held that Insituform has successfully rebutted the Festo presumption; i.e., that a narrowing amendment made for a reason of patentability surrenders the entire territory between the original claim limitation and the amended claim limitation.
The technology in issue relates to a method for rehabilitating a damaged underground pipe without digging it up. The claim in issue resulted from the applicant combining original independent claim 1 (which did not specify the number of suction cups or locations of the vacuum source) with dependent claims 2, 3 and 4, to define over a prior art reference applied to all four claims by the U.S. Patent and Trademark Office (USPTO). Claim 4 recited the application of vacuum to the pipe liner from a single, movable cup. The prior art reference in question used a continuous vacuum created by a single vacuum source. The accused process used by CAT Contracting employed multiple suction cups placed along a tube. In Insituform IV, the Federal Circuit held that the amendment, narrowing the scope of literal coverage from multiple suction cups to a single suction cup, bore “no more than a tangential relation to the equivalent in question” and was, therefore, not barred by the Festo presumption.
This decision addresses one of the three Festo bar presumption “rebuttal” possibilities discussed by the en banc Federal Circuit in Festo III (2003): (i) the patentee may demonstrate that “the alleged equivalent would have been unforeseeable at the time of the narrowing amendment;” (ii) the patentee may demonstrate that “the rationale underlying the narrowing amendment bore no more than a tangential relation to the equivalent in question;” or (iii) the patentee may demonstrate “‘some other reason’ suggesting that the patentee could not reasonably have been expected to have described the alleged equivalent.”
The Federal Circuit, citing Festo III, noted that “[w]hether the patentee has established a merely tangential reason for a narrowing amendment is for the court to determine from the prosecution history record without the introduction of additional evidence, except, when necessary, testimony from those skilled in the art as to the interpretation of that record.” After considering the matter, the Federal Circuit found that the basis articulated in the prosecution history for distinguishing the claim over the prior art applied was not the number of suction cups but the placing of the vacuum source closer to the cup, thereby permitting use of a smaller compressor. Thus, the Federal Circuit held that Insituform has successfully met the “tangential relationship” rebuttal test articulated in Festo III.
Practice Note
In terms of analyzing when use of the doctrine of equivalents is barred and when it is available (and if available to what extent) Insituform IV takes us back closer to the pre-Festo days than many might have thought the Federal Circuit was likely to go. In light of this decision, and to preserve possible application of the “tangential relationship” rebuttal test of Festo III, patent prosecutors are well advised to precisely articulate to the USPTO the narrowest possible reason why a particular amendment distinguishes over the prior art. Although equivalents (under doctrine of equivalents ) will be lost for any structure or method to which the reason applies, it may at least be preserved for other structures (to which the stated reason does not apply). Opinion writers beware, the doctrine of equivalents is back!
Would You Like Your Claim Term “Ordinary” or Specification Defined?
By Paul Devinsky and Jeffrey Woller
Different panels of the U.S. Court of Appeals for the Federal Circuit, in reviewing claim construction, arrived at different conclusions: one written by Judge J. Linn insisting the ordinary meaning rule must be applied to claim terms and the other written by J. Michel finding the claim terms to be limited by the specification.
In reviewing an International Trade Commission (ITC) action involving three Gemstar patents as applied to the digital cable television set top boxes (DCT-STBs) of various respondents, including Scientific-Atlanta, the Federal Circuit found the ITC erred in construing several claim terms as limited by the disclosure of their respective specifications. Gemstar-TV Guide International, Inc. v. ITC & Scientific-Atlanta, Inc., Case No. 03-1052 (Fed. Cir. Sept. 16, 2004) (Linn, J).
The specification of the patent in suit, describing the preferred embodiment of the inventive television guide display, stated “an innovative cursor . . . for the irregular array . . . is required which satisfies several conflicting requirements.” Finding the claim term “visual identification” was not used or defined in the written description, the ITC used the preferred embodiment description to find Gemstar had disclaimed a conventional cursor by requiring the innovative cursor and the “visual identification” must be commensurate with the described innovative cursor.
The Federal Circuit panel, citing Texas Digital, noted a claim term is given the “full range of its ordinary meaning as understood by persons skilled in the relevant art” unless the patentee clearly disclaimed the scope of coverage with “words or expressions of manifest exclusion or restriction.” Continuing the analysis and citing to the recently decided Liebel-Flarsheim Co. case, the panel further noted a description of an embodiment, without a demonstrated intent to limit the claims to the embodiment, does not limit the claim scope. The Federal Circuit then held the term “visual identification” was not limited to the innovative cursors described in the `204 specification but was defined by the ordinary meaning of the individual words “visual” and “identification” as defined in dictionaries contemporaneous to the specification.
Applying a similar reasoning, the Federal Circuit overruled the ITC’s construction that limited several terms by the disclosures in the respective patents.
In contrast, a different Federal Circuit panel upheld a district court claim construction finding the scope of claim the term “group” was properly limited by the specification. Irdeto Access, Inc. v. EchoStar Satellite Corp., Case No. 04-1154 (Fed. Cir. Sept. 4, 2004) (Michel, J). This case involved a system for broadcasting digital information signals using layers (or tiers) of complimentary encryptions and decryptions keys. During prosecution, Irdeto’s attorney overcame an indefiniteness rejection of the claim terms “box,” “group” and “service” (which were used to describe encryption keys) by stating “we do not believe there is any accepted terminology in the art and since the applicants have described their specific keys in the specification, we believe that the claims are not indefinite.” The District Court used this statement to construe the term “group” as a subset of an entire subscriber base, as described and used consistently throughout the specification.
On appeal, Irdeto argued, under Liebel-Flarsheim, the term “group” should be given its ordinary meaning. But, the Federal Circuit stated when a term does not have an accepted meaning in the art, the term is construed “only as broadly as provided for by the patent itself.” Since the applicant had informed the examiner, as well as the public, the terms “service,” “group” and “box” had no accepted meaning in the art, and the terms are “adequately described in the specification.” The Federal Circuit construed the term “group” consistent with its use in the specification, which did not “contemplate a single group made up of the entire subscriber base.”
Practice Note
While these two claim construction panel decisions are reconcilable on their facts (indeed Judge Michel was a member of both panels), each appear to represent a different philosophical approach to claim construction. While the plain meaning rule offers this attraction of the simplicity of a “bright-line” rule, it can lead to breathtakingly broad claim constructions, oftentimes far beyond the scope of what the inventors originally thought they had invented and beyond what the U.S. Patent and Trademark Office objectively thought it had patented. Further guidance from the Federal Circuit in the area of claim construction is expected from the decision to be rendered in the currently pending en banc case of Phillips v. AWIT Corp. The recent AstraZeneca case, discussed in this issue, is yet another example of Federal Circuit panel decisions regarding claim construction issues reflecting an intra-circuit tension over application of the plain meaning rule.
Limiting Effect of Specification and Prosecution History Trumps Ordinary Meaning Rule
By Astrid Spain
Acknowledging its recent case law on claim construction is “unfortunately complex and inconsistent,” the U.S. Court of Appeals for the Federal Circuit reversed a district court’s finding of infringement by finding error in the failure to recognize the limiting effect of the patent specification and prosecution history. AstraZeneca AB. v. Mutual Pharmaceutical Company, Inc., Case Nos. 04-1100 (Fed. Cir. Sept. 30, 2004) (Michel, J.).
AstraZeneca sued Mutual under § 271(e)(2), under which it is an “act of infringement” to submit an Abbreviated New Drug Application (ANDA) to the U.S. Food and Drug Administration (FDA) to obtain approval to market a drug that is claimed in a unexpired patent. AstraZeneca alleged Mutual infringed its patent by submitting an ANDA seeking approval of extended-release felodipine tablets, which AstraZeneca markets as PLENDIL. After construing the asserted patent claims, the district court granted AstraZeneca’s motions for summary judgment on infringement and validity. Mutual appealed.
The claim construction dispute focused on the term “solubilizer,” common to all asserted claims. The parties agreed artisans would understand the term “solubilizer” to embrace three distinct types of chemicals: (1) surface active agents (also known as “surfactants”), (2) co-solvents and (3) complexation agents. Mutual argues that in the context of the patent specification and prosecution history, “solubilizer” comprehends only surfactants. Because Mutual’s ANDA sought approval for extended-release felodipine tablets that use a co-solvent, not a surfactant, as a solubilizer, it argued that filing its ANDA was not an act of infringement.
The Federal Circuit panel began its claim construction analysis by conceding inconsistency of its recent decisions, which appear to suggest two distinct approaches to claim construction. Against this backdrop, the Court framed the issue as whether the intrinsic evidence takes priority in construction of the claim term “solubilizer,” or if the ordinary meaning of the term, as determined from extrinsic sources, should control the claim construction in the absence of intrinsic evidence of clear inventor lexicography or disavowal. Concluding the intrinsic evidence clearly binds AstraZeneca to a narrower definition of “solubilizer” than the extrinsic evidence would support, the Court deferred the choice between the two claim construction approaches to another case. Rather, the Court noted the inventors had chosen to be their own lexicographers, by defining solubilizers as “semi-solid or liquid non-ionic surfactants.” The specification was also deemed to clearly disavow nonsurfactant solubilizers by pointing to the micelle structures, something only surfactants can form, as a feature of the novel formulation, while criticizing other types of solubilizers, specifically co-solvents, for having undesirable properties. The Court also noted all of the solubilizers listed in the specification and used in the working examples were surfactants. Explicit statements in the prosecution history were further found to support the conclusion the claim term “solubilizer” should be limited to surfactants.
Practice Note
The Court deferred the question of which trumps claim construction, the specification and prosecution history or the ordinary meaning as determined from sources such as dictionaries. According to a footnote, citing the Phillips v. AWH Corp. case presently pending before the Court for en bank review, “Resolution of this question may be approaching.”
Patents / Summary Judgment Actions
Contested Term Given Broad Interpretation Based on Intrinsic Evidence
By Paul Devinsky and Tyler Woods
The U.S. Court of Appeals for the Federal Circuit of Appeals overruled the grant of summary judgment of non-infringement holding “substantially spherical, concave reflective surface . . . having a cylindrical component added thereto” included a “toroidal” surface, On-Line Technologies, Inc. v. Bodenseewerk Perkin-Elmer GMBH, Case No. 04-1291 (Fed. Cir. Oct. 13, 2004).
The device at issue is a long-path gas cell, which is used in an infrared spectrometer to determine the composition of gases such as emissions from industrial plants. On-Line alleged infringe-ment of its patent on a method for increasing the length of the light path in a gas cell and thereby increasing the accuracy of the measurement and misappropriation by Perkin-Elmer of
On-Line’s trade secrets (after signing a nondisclosure agreement).
The Court noted when construing claims, guidance as to the meaning of unclear language can be found in the extrinsic evidence of the record (e.g., the specification) and references to the preferred embodiment(s) described in the patent. Working with these principles, the Court explained the specification made it clear a toroidal surface is substantially spherical and has a “cylindrical component superimposed thereupon.” Furthermore, the reference to the preferred embodiment as having mirrors with toroidal surfaces would “give rise to a very strong inference” that the claim should be construed to include such surfaces. Finally the Court noted that even though both parties agreed the mathematical description of the devices in question is different, a person of ordinary skill in the art would understand the patent language as a way of describing either product.
The Court next considered On-Line’s claim Perkin-Elmer misappropriated On-Line’s trade secret by using information it gained while it had access to On-Line’s product pursuant to a nondisclosure agreement. On-Line presented no evidence Perkin-Elmer engaged in any conduct prohibited by the nondisclosure agreement. The only evidence presented was that Perkin-Elmer did not begin to incorporate the features of On-Line’s patent into its own product until after the patent was issued. The Court noted such information did not qualify for protection as a trade secret since it had become public knowledge once the patent was issued.
The Court also considered On-Line’s assertion Perkin-Elmer misappropriated the infrared light source and assembly used in the On-Line spectrometer. The evidence at trial indicated the use of the light source had already been disclosed by a third party, and Perkin-Elmer learned of the light source independent of any contact with On-Line. On-Line relied solely on opinions of an expert to prove that Perkin-Elmer’s light source was identical or substantially similar to On-Line’s. The Court held conclusory assertions by expert witnesses are not sufficient to overcome evidence that the light source was public knowledge or Perkin-Elmer’s independent discovery of the light source.
Orders Staying Parallel Litigation Subject to Immediate Appeal
By Irene Lee
Addressing the issue of whether an order barring parallel litigation is an injunction subject to immediate appeal, the U.S. Court of Appeals for the Federal Circuit applied its own standard and held that injunctions arbitrating between a co-pending patent declaratory judgment action and an infringement case, each pending before a different district court, will be reviewed under the law of the Federal Circuit. Lab. Corp. of Am. Holdings v. Chiron Corp., Case No. 03-1572 (Fed. Cir. Sept. 30, 2004) (Linn, R.).
Chiron owns several U.S. patents related to detecting the Hepatitis C virus in human blood and blood products. LabCorp supplies testing products that detect the presence and quantity of the Hepatitis C virus and performs such tests at its facility. Chiron threatened a lawsuit against LabCorp, and in response LabCorp entered into a standstill agreement with Chiron. Six months later, the standstill agreement expired but the parties had still not reached an agreement. LabCorp raced to the U.S. District Court for the District of Delaware and filed a declaratory judgment action against Chiron. Four hours later—before learning of the Delaware action—Chiron filed a patent infringement action against LabCorp in the U.S. District Court for the Northern District of California. Thereafter, LabCorp moved to enjoin Chiron from prosecuting the parallel litigation in California. The Delaware district court granted the motion. Chiron appealed.
The Federal Circuit had to first decide whether the Federal Circuit or Third Circuit law would be used to decide on a threshold issue affecting its jurisdiction over the appeal, i.e., whether an order barring parallel litigation constitutes an injunction subject to immediate appeal, or is it merely a procedural order which is not subject to immediate appeal. The Federal Circuit, joining the Second, Fifth and Tenth Circuits, has now concluded an injunction against co-pending litigation in other district courts is immediately appealable. The Third Circuit views such a ruling as a non-appealable venue determination.
In deciding what law to apply, the Court observed the rule articulated in Midwest Indus., Inc. v. Karavan Trailers, Inc: “a procedural issues…is nonetheless governed by Federal Circuit law if the issue pertains to patent law, if it bears an essential relationship to matters committed to our exclusive control by statute, or if it clearly implicates the jurisprudential responsibilities of this court in a field within its exclusive jurisdiction.” The Court further explained national uniformity is needed in patent cases and held the law of the Federal Circuit applies to injunctions arbitrating between co-pending patent declaratory judgment and infringement cases in different district courts.
Patentee Must Sell At Least One Item to Claim Lost Profits
By Patrick Richards
The U.S. Court of Appeals for the Federal Circuit reversed the denial of the defendant’s motion for a new trial on damages, holding in order to claim lost profit damages, a patentee needs to have been selling some item, the profits of which have been lost due to infringing sales. Poly-America, L.P., v. GSE Lining Tech., Inc., Case No. 04-1022 (Fed. Cir. Sept. 14, 2004). The Court also held the plaintiff was not permitted to claim the lost profits based on activities of a related corporation.
Poly-America sued GSE for infringement of two of its patents directed to blown-film liners for forming an effective barrier for landfill use. While Poly-America owns the two patents-in-suit, the patents are non-exclusively licensed by Poly-America’s sister corporation, Poly-Flex, Inc. Although Poly-America and Poly-Flex share interests as two entities collaborating in the manufacture and sale of textured landfill liners and have a common parent corporation, they are organized as separate entities. Accordingly, Poly-America does not sell the patented products or any products related to the patents-in-suit. After a trial on the merits, the district court had awarded Poly-America lost profits based on Poly-Flex’s lost sales.
On appeal, GSE argued the district court improperly treated Poly-America and Poly-Flex as a single economic unit, thereby improperly permitting Poly-America to claim lost profits based on Poly-Flex’s lost sales. Poly-America argued the two corporations share a unity of interest justifying treating them as a single economic unit.
The Federal Circuit found the parent corporation had organized Poly-America and Poly-Flex as two separate corporate identities having separate functions to suit its own goals and purposes and, therefore, must accept the associated burdens with the benefits. The Court recognized that although parties to a lawsuit may allocate the disposition of infringement damages among themselves, they cannot create lost profits for a patentee if there are none. Thus, as the patent owner, Poly-America has the right to sue under its patents, but it cannot recover lost profits of its sister company and licensee, Poly-Flex.
The Federal Circuit noted the recovery of lost profits is not limited to situations in which the patentee is selling the patented device. However, the Court explained the patentee needs to have been selling some item, the profits of which have been lost due to infringing sales, in order to claim lost profit damages.
Monsanto Reaps Where Ralph Has Sown
By Astrid Spain
In a case that ultimately focused on damages, the U.S. Court of Appeals for the Federal Circuit determined the district court did not abuse its discretion, either in its choice of sanction or its denial of a post-judgment motion to limit the jury’s damage award for patent infringement. Monsanto Co. v. Ralph, Case Nos. 03-1243, 04-1001 (Fed. Cir. Sept. 7, 2004) (Lourie, J.).
Monsanto developed and patented recombinant gene sequences can be inserted into plant seeds to protect them against the effects of glyphosate-based herbicides, enabling farmers to spray herbicides such as Roundup over their fields to kill weeds and other undesirable plants without killing the desired crops that grow from those seeds. Monsanto also developed and patented recombinant gene sequences encoding proteins toxic to certain insects that commonly cause significant damage to host plants, allowing the resulting plants to produce their own insecticide.
Monsanto requires seed companies that manufacture and resell seed containing the two patented technologies to enter into non-exclusive, restricted-use licenses. Monsanto additionally requires retailers to execute standardized “technology agreements” with growers before selling the seeds, requiring the growers to license the seeds under terms restricting their use to a single season and prohibiting saving seeds for replanting or re-supplying to third parties. The contract further contains a clause specifying damages at 120 times the technology fee, a pre-set fee built into the price of each seed bag of seed. Asserting Ralph saved and re-planted patented seeds, Monsanto filed suit for, inter alia, willful infringement of five of Monsanto’s patents and breach of contract.
After striking all of Ralph’s pleadings in the case as a penalty for intentionally violating court orders and repeatedly lying under oath, the Court entered judgment for Monsanto on liability and ordered the case to trial on damages only. The jury awarded damages for patent infringement, which once trebled for willfulness, amounted to $3 million and, in the alternative, liquidated damages under the contract of $2.7 million. Because the patent infringement and breach of contract claims were filed in the alternative, the court concluded that satisfaction of the higher patent infringement award would extinguish the lesser breach of contract award. Ralph appealed.
After affirming the appropriateness of the sanctions imposed below for Ralph’s willful violation of court orders, destruction of evidence and subornation of perjury the Federal Circuit turned to the damages issues. Here, the Court rejected Ralph’s argument that the technology fee should be viewed as the established royalty and noted, while it qualifies as a royalty, the technology fee covers only a narrow, contractually agreed-upon use of the seed and does not include planting or transferring saved seed. The Court also rejected the argument that a reasonable royalty cannot be in excess of anticipated profits. Conceding that an infringer’s anticipated profit from use of the patented invention is among the factors properly considered in determining a reasonable royalty, the Court pointed out that, where a patentee is unwilling to grant an unlimited license, the hypothetical negotiation is of limited value. Finally, the Court relied on its decision in McFarling, that the “one-size-fits-all” 120 multiplier in the liquidated damages clause of the technology agreement is unenforceable, but did not remand in view of the higher patent infringement award’s cancellation of the lesser breach of contract award.
USPTO Must Make Findings to Support a Determination of Unpatentability
By Lawrence Cullen
In affirming in part and remanding in part a decision from the U.S. Patent and Trademark Office Board of Appeals and Interferences (Board) the U.S. Court of Appeals for the Federal Circuit held that the Board did not abuse its discretion in refusing to consider a motion that failed to comply with the Standing Order of the Board but that the Board failed to apply the correct standard in deciding whether Bilstad’s disclosure supported the count under the written description requirement of 35 U.S.C.§ 112, 1. Bilstad v. Wakalopulos, No. 03-1528 (Oct. 7, 2004).
Bilstad provoked an interference on an invention for sterilizing three-dimensional objects using ionizing radiation by copying claims from a patent of Wakalopulos. The count included a limitation calling for a moveable member manipulating objects in a plurality of directions within the reactive volume wherein the manipulated objects are sterilized. Wakalopulos filed a motion for judgment stating the claims were unpatentable to Bilstad alleging their application did not provide written description support for manipulating objects in a plurality of directions. After the time period for filing a motion to amend claims passed, Bilstad attempted to obtain an extension of time to file an amended set of claims to remove the limitations alleged to lack written description support. The Board refused to allow Bilstad the extension of time. Then, without conducting a prior conference call with the administrative patent judge (APJ), as required by the standing order, Bilstad filed a miscellaneous motion seeking leave to belatedly file the amended claims. The Board refused to consider the motion because Bilstad did not comply with the prior conference call rule. The Board also granted Wakalopulos’ motion holding the claims unpatentable to Bilstad for a lack of written description support. Bilstad appealed.
Bilstad argued that the Board improperly merged different dictionary definitions to construe the claim term “plurality” to mean “an indefinite numerical range bounded by two and infinity.” Bilstad also argued that their applications discloses manipulating the objects in a small number of directions that satisfies the written description requirement for claiming a “plurality of directions.” Bilstad also argued that a conference call in which the extension of time was discussed satisfied the required conference call for the miscellaneous motion.
The Court held that the Board properly construed the term “plurality” by merging different dictionary definitions since the Board considered both proffered dictionary definitions to be incomplete. However, in remanding the Board’s determination of a lack of written description, the Court determined the Board did not adequately discuss the understandings of persons
skilled in the art and whether Bilstad’s written description would reasonably convey to a person skilled in the art that Bilstadhad possession of the claimed subject matter. The Court also noted the Board made no findings on the predictability of the art. However, agreeing Bilstad failed to conduct a conference call with the APJ prior to filing its miscellaneous motion, the
Court affirmed the Board’s refusal to consider Bilstad’s miscellaneous motion.
Circumvention Provision of the Digital Millennium Copyright Act Is Not a New Property Right
By Bernard Codd
In a case of first impression, the U.S. Court of Appeals for the Federal Circuit affirmed a summary judgment finding no violation of the anti-circumvention and anti-trafficking provisions of the Digital Millennium Copyright Act (DMCA) by distributing garage door openers that are compatible with the plaintiff’s garage door opening (GDO) systems. The Chamberlain Group, Inc. v. Skylink Technologies, Inc., Case No. 04-1118 (Fed. Cir. Aug. 31, 2004) (Gajarsa, J.).
Chamberlain manufactures GDO systems comprised of an opener and a transmitter. Skylink is an aftermarket provider of universal transmitters that are compatible with different GDO systems. The dispute involved Chamberlain’s Security+ line of GDOs that incorporates a copyrighted “rolling code” computer program to control access to Chamberlain’s copyrighted opener program and Skylink’s universal transmitter. The transmitter, which does not incorporate the rolling code, nevertheless allows users to operate the Security+ opener program. Chamberlain alleged Skylink’s transmitters circumvented the rolling code to gain access to the copyrighted opener program in violation of the DMCA. Section 1201(a)(2)(A) of the DMCA prohibits manufacturing or providing any technology product that circumvents a technological measure effectively controlling access to a protected work.
Sating their task was “essentially one of statutory construction,” the Federal Circuit reasoned the anti-circumvention provisions of the DMCA establish causes of action for liability, not a new property right. Noting the DMCA defines circumvention as an activity undertaken “without the authority of the copyright owner,” the Court explained a plaintiff alleging circumvention would have to prove the defendant’s access to the opener program was unauthorized. The Court indicated this would be a “significant burden” as the copyright laws authorize consumers to use the copy of Chamberlain’s opener program embedded in the GDO systems they purchased.
Chamberlain argued all uses of products containing copyrighted software to which a technological measure controlled access are per se illegal under the DMCA unless the manufacturer provided the consumer with explicit authorization. Reasoning Chamberlain’s interpretation of the DMCA would grant manufacturers broad exemptions from both the antitrust laws and the doctrine of copyright misuse, the Court determined such an interpretation is only plausible if the DMCA conveyed a new property right.
The Federal Circuit opined that Chamberlain’s proposed construction would allow any manufacturer to restrict consumers’ rights to use its products in conjunction with competing products by adding a single copyrighted sentence to its product and wrapping the copyrighted material in a trivial “encryption” scheme. This would allow manufacturers to create prohibited aftermarket monopolies. Harmonizing the DMCA with antitrust laws, the Court explained congressional intent in passing the anticircumvention and anti-trafficking provisions was to restore the balance between the interests of copyright owners and users because large scale copying and distribution of copyrighted materials was now easy and inexpensive. The Court determined circumvention is not a new form of infringement but rather a new violation prohibiting actions or products facilitating infringement. Because Skylink’s transmitter enables only legitimate uses of the copyrighted software and does not facilitate copying of the opener software, the Federal Circuit declared “[t]he DMCA cannot allow Chamberlain to retract the most fundamental right the Copyright Act grants consumers: the right to use the copy of Chamberlain’s embedded software that they purchased.”
The Court set forth a six-element test that plaintiffs must prove to establish a prima facie case of circumvention under § 1201(a)(2) of the DMCA: (1) ownership of a valid copyright on a work, (2) effectively controlled by a technological measure, which has been circumvented, (3) third parties can now access (4) without authorization, in a manner that (5) infringes or facilitates infringing a right protected by the Copyright Act, because of a product that (6) the defendant either (i) designed or produced primarily for circumvention; (ii) made available despite only limited commercial significance other than circumvention; or (iii) marketed for use in circumvention of the controlling technical measure. Because Chamberlain failed to show lack of authorization and did not allege copyright infringement, the District Court prop-erly granted summary judgment in Skylink’s favor.
Injunction Must Be Specific to Comply with Rule 65(d)
By Firasat Ali and Arturo Sandoval
The U.S. Court of Appeals for the Federal Circuit has now vacated and remanded an injunction that did not comply with the specificity requirements of Federal Rule of Civil Procedure (F.R.C.P.) 65(d), relating to the scope of an injunction. The Court also vacated and remanded a portion of the judgment relating to the accused infringer’s affirmative defenses of invalidity and unenforceability. International Rectifier Corp. v. IXYS Corp., Case No. 04-1014 (Fed. Cir. Sept. 13, 2004). (Plager, J.)
International Rectifier is the assignee of a patent which relates to semiconductor device packages. On the same day its patent issued, International Rectifier filed a patent infringement suit against IXYS. Two weeks after the suit was filed IXYS modified the design of its accused products. International Rectifier subsequently filed a motion for summary judgment of infringement of the old products, which IXYS did not oppose (primarily because there was no economic incentive by IXYS to defend a suit against a discontinued product having only de minimis sales). The district court granted International Rectifier's motion for summary judgment, entered final judgment, and granted a permanent injunction against IXYS that simply prohibited any future infringement of the patent; i.e. the language proposed by International Rectifier and opposed by IXYS.
IXYS claimed that the injunction was overbroad in violation of F.R.C.P. 65(d) and urged the district court to limit the injunction to products made according to IXYS’ original design and any post-injunction products that differed in a “merely colorable” way from the adjudicated products. IXYS’ proposed injunction would exclude its redesigned products so that International Rectifier would be unable to accuse those products of infringement in a contempt proceeding. The district court rejected IXYS’ objections and entered final judgment using the language proposed by International Rectifier. IXYS appealed.
The Federal Circuit vacated the permanent injunction, finding that “the injunction failed to satisfy Rule 65(d) because it lacked specific terms and a reasonably detailed description of the acts sought to be restrained.” Applying the holding of its Additive Controls case (1993), the Court rejected as overly broad a permanent injunction “that simply prohibits future infringement of a patent.” The Federal Circuit explained that the district court erroneously failed to state which acts constituted infringement or to limit the injunction’s scope to the manufacture, use or sale of the specific devices found to infringe. Furthermore, as the only acts an injunction may prohibit are the infringement of a patent by an adjudicated devices and infringement by devices not more than colorably different from the adjudicated devices, the Federal Circuit held that in order to comply with Rule 65(d), an injunction is required to explicitly proscribe those acts.
The Court rejected IXYS’ request to exclude from the injunctions the redesigned IXYS’ redesigned products, which International Rectifier chose not to accuse despite efforts by IXYS to obtain an adjudication of those products below. The Court reasoned that the applicability of a properly limited injunction to those products must await a contempt proceeding, if one is ever brought, since those products were/are not before either the district court or the Federal Circuit.
Finally, the judgment regarding no invalidity and no unenforceability in favor of International Rectifier were vacated because those issues were never adjudicated. IXYS withdrew its affirmative defenses during discovery and prior to the date on which International Rectifier filed its motion for summary judgment. Thus, those issues were not before the court and International Rectifier was not entitled to adjudication of them.
