IP Update, Volume 7, No. 7, July 2004
July 2004
IN THIS ISSUE
- Patents / Prosecution / Written Description-Federal Circuit Declines en banc Review of Written Description Requirement
- Patents / Claim Construction-Going Way Out on a Limb, the Federal Circuit Construes “Within” to Mean “Inside”
- Patents / Appellate Jurisdiction / ClaimConstruction-Dismissal without Prejudice May Be Final Judgment
- Patents / Appellate Jurisdiction-Interlocutory Denial of Sovereign Immunity Is Not an Appealable Issue for Compulsory Counterclaims
Patents / Prosecution / Written Description
Federal Circuit Declines en banc Review of Written Description Requirement
By Paul Devinsky and Cameron Weiffenbach
The U.S. Court of Appeals for the Federal Circuit declined a request by the University of Rochester for an en banc rehearing of the Court’s holding in University of Rochester v. G.D. Searle & Co., Inc. The Court held that the University of Rochester’s patent is invalid for failing to comply with the written description requirement of 35 U.S.C. §112, 1 because the patent specification failed to specifically disclose non-steroidal compounds that could inhibit the activity of the PGHS-2 gene product as required by the claims and there was no evidence that knowledge of such compounds would have been known to those having ordinary skill in the art. University of Rochester v. G.D. Searle & Co., Inc., Case No. 03-1304 (Fed. Cir. July 2, 2004) (Newman, J., dissenting) (Rader, J., dissenting) (Linn, J., dissenting) (Dyk, J., concurring) (Lourie, J., concurring).
In 1997, the Federal Circuit, in Reagents of the Univ. of Cal. v. Eli Lilly & Co., held that the written description requirement of §112, 1 is a separate requirement from the enablement and best mode requirements and held a biotech patent invalid because the written description did not provide adequate support for the claimed subject matter. This holding created a stir in the patent community because the demarcation between enablement and written description requirements had become somewhat unclear. In 2002, the Court made what some regard as a flip-flop when it issued its decision in Enzo Biochem, Inc. v. Gen Probe, Inc. The first panel in the Enzo Biochem case followed Eli Lilly and held the patent invalid but on rehearing, the panel reversed itself. The second Enzo Biochem decision added to the confusion surrounding the “new written description invalidity doctrine” created by Eli Lilly.
The issues presented have generated diverse opinions among the judges on the Federal Circuit. In the University of Rochester case, Judges Newman, Rader and Linn wrote separate dissenting opinions. Judges Dyk and Lourie wrote concurring opinions.
Judges Lourie, who authored the panel decision in the University of Rochester case, wrote a concurring opinion in support of the denial of rehearing stating that “there is and always has been a separate written description requirement in the patent law” and that “Section 282 of the Patent Act lists as [an invalidity] defense to an infringement action...arising from a failure to comply with a requirement of section 112 of the Act, which includes written description.” Judge Rader disagreed and argued (in a dissenting opinion) that prior to the Court’s decision in Eli Lilly there were only two requirements, enablement and best mode, and prior to that time the function of the written description was only to ensure the inventor had possession of the claimed subject matter as of the filing date of the application relied upon. Judge Linn (in a dissenting opinion) stated: “Reading into paragraph 1 of section 112, an independent written description requirement, divorced from enablement, sets up an inevitable clash between the claims and the written description as the focus of the scope of coverage. This is ill-advised. Surely there is no principle more firmly established in patent law than the primacy of the claims in establishing the bounds of the right to exclude.”
The University of Rochester case, like the Eli Lilly case, involved biotechnology patents. The concurring and dissenting opinions demonstrate a diversity of opinion in the Federal Court as to whether the written description should be considered a separate requirement for determining validity only of biotech patents. Judge Rader (in a concurring opinion) stated that the written description requirement “is the same for all types of inventions, although it may be applied differently, based on the technology and what is known by one of ordinary skill in the art at the time an invention was made.” Judge Dyk (also in concurring opinion) indicated that he does not endorse the existing “written description jurisprudence” and that the Court has yet to “articulate satisfactory standard that can be applied to all technologies.” However, Judge Dyk did not regard the University of Rochester case as the “right case, in which to consider those difficult questions.”
Practice Note
The district courts and patent bar will have to wait for another case (or for a successful petition for cert to the U.S. Supreme Court in this case) to resolve the written description issues created by the Eli Lilly and Enzo Biochem decisions. In the meantime, practitioners, especially those in the biotechnology arts, are well advised to ensure that the written description in the patent specification sets forth “a precise definition, such as by structure, formula, chemical name or physical properties” of any claimed element.
Patents / Infringement §271(F)(1)
It Is the Location of the Tort and Not the Location of the Injury
By Brian Colandreo
Addressing the applicability of 35 U.S.C. §271(f)(1) to the issue of components that are manufactured, assembled and sold exclusively outside of the United States, the U.S. Court of Appeals for the Federal Circuit held that “the ‘tort’ of patent infringement occurs where the offending act is committed and not where the injury is felt.” Pellegrini v. Analog Devices, Inc., Case No. 04-1054 (Fed. Cir. July 8, 2004).
Pellegrini is the owner of U.S. Pat. 4,651,069 (the `069 patent) (directed to brushless motor drive circuits). Analog develops and fabricates integrated circuit chips, including a line of chips called ADMC chips. Pellegrini sued Analog, alleging infringement of the `069 patent and contending that certain claims of the `069 patent read on the combination of ADMC chips and other components in brushless motors. Both parties moved for summary judgment. The district court granted Analog’s motion with respect to Pellegrini’s infringement claim under §271(f)(1), and Pellegrini appealed.
The ADMC chips that were the subject of Pellegrini’s infringement claim were manufactured exclusively outside of the United States and only sold and shipped to customers outside the United States. However, Pellegrini asserted that since Analog’s headquarters are in the United States and the instructions for the production and disposition of the ADMC chips emanate from the United States, the chips should be regarded as having been “supplie[d] or cause[d] to be supplied in or from the United States” rendering Analog liable as an infringer under 35 U.S.C. §271(f)(1).
The Federal Circuit, considering the issue presented to be a matter of “first impression,” affirmed the district court’s decision, holding that “[35 U.S.C. §271(f)(1)] applies only where components of a patent invention are physically present in the United States and then either sold or exported ‘in such a manner as to actively induce the combination of such components outside the United States in a manner that would infringe the patent if such combination occurred within the United States.’” Further, citing North American Phillips, the Court held that “the ‘tort’ of patent infringement occurs where the offending act [making, using, selling, offering for sale or importing] is committed and not where the injury is felt.” Accordingly, the Federal Circuit held that “suppl[ying] or caus[ing] to be supplied” in §271(f)(1) clearly refers to physical supply of components, not simply to the supply of instructions or corporate oversight,” and “although Analog may be giving instructions from the United States that cause the components of the patented invention to be supplied, it is undisputed that those components are not being supplied in or from the United States.”
Which Dictionary Definitions Controls in Claim Construction?
By Steven Allis
The U.S. Court of Appeals for the Federal Circuit, in the course of applying the dictionary driven plain meaning rule, revealed internal disagreement on the proper application of dictionary definitions to claim construction when the dictionary provides competing meanings. Nystrom v. Trex Company, Inc., Case No. 03-1092 (Fed. Cir. June 28, 2004) (Linn, J.) (Gajarsa, J., dissenting in part).
Nystrom, an individual, sued Trex, a manufacturer of exterior decking planks, for the infringement of certain claims directed to a specially shaped board used in the construction of patios and decks. At issue in the case was the construction of the term “board.” The district court construed “board” to mean only boards made of wood. The district court based its construction on the specification, which was limited to wood boards, and on arguments made in the prosecution history, which distinguished over the prior art, which did not concern wood flooring. The district court, on summary judgment, then ruled that Trex did not infringe because its boards were not made of wood. The district court also found that certain patent claims were invalid because the claimed thickness of the patented boards was anticipated by drawings found in the prior art. Nystrom appealed.
The Federal Circuit found that the district court’s invalidity ruling was in error because it relied on information found in un-scaled drawings, thus reaffirming its prior holdings that arguments cannot be made on the dimensions of drawings that are not made to scale.
Regarding infringement, however, the panel split regarding interpretation of the claim term “board.” The majority ruled that the district court’s claim construction was incorrect because references to wood boards in the specification did not limit the general meaning of “board” to exclude non-wood boards. The majority also concluded that the patentee did not limit the meaning of “board” in the prosecution history when arguing that a prior art reference was improperly used in an obviousness rejection because it concerned non-wood flooring materials. The majority concluded that the argument was made simply to highlight that there was no motivation to combine the prior art for the obviousness rejection, but that the argument did not operate to limit the scope of the claims. Ultimately referring to dictionary definitions for the meaning of “board,” the majority found definitions referring specifically to wood boards and other definitions referring to boards made of any material. Applying the broadest meaning in that context, the majority concluded that “board” referred to boards made of any material.
In dissent, Judge Gajarsa criticized the majority for over reliance on dictionary definitions for claim interpretation. Judge Gajarsa restated the Court’s recent decision in Novartis Pharmaceuticals v. Eon Labs that held that competing dictionary definitions compel a return to the intrinsic evidence to determine which definition should control. Since the specification and prosecution history indicated that “board” meant wooden boards, Judge Gajarsa concluded that the more restrictive definition should control.
Vitiation: Without Attachment There Can Be No Connection
By Mehul Jani
In upholding a decision by a district court that granted summary judgment of non-infringement under the doctrine of equivalents, the U.S. Court of Appeals for the Federal Circuit held that because a finding of infringement under the doctrine of equivalents would vitiate a claim term, no reasonable jury could find that the accused device is insubstantially different from the claimed device. Searfoss v. Pioneer Consolidated Corporation, Case No. 03-1606 (Fed. Cir. July 6, 2004).
The patent-in-suit (`955 patent) is directed to a moveable cover system for truck beds. Searfoss conceded that Pioneer did not literally infringe the `955 patent. Rather, Searfoss argued that Pioneer infringed the `955 patent under the doctrine of equivalents. The infringement issue focused on the claim term “actuation means for connecting…”; the district court found the term to be a means-plus-function limitation (under §112(6)), having two claimed functions.
Over Searfoss’ argument that the ordinary dictionary definition of the term “connecting,” which includes direct or indirect connection, should be adopted, the district court held that, as used in the claim and to achieve the two claimed functional limitations, the term “connecting” requires a direct, pivotal connection and construed the term, “connecting” to be synonymous with “attaching.” The district court found further support for this construction in the corresponding disclosed structure found in the specification of the `955 patent.
The district court, after determining that “no reasonable jury could find the Pioneer System contains the equivalent of an ‘actuation means’ with a ‘connecting’ structure,” granted Pioneer summary judgment of non-infringement. Searfoss appealed.
The Federal Circuit affirmed, noting that an element in an accused product is equivalent to a claimed limitation if the differences between the two are insubstantial to one of ordinary skill in the art. The Federal Circuit agreed with the district court that the claims require a direct connection through the actuation means and that the Pioneer product does not have such a direct connection. The Court went on to find the indirect connection of the Pioneer product to be an equivalent of the direct connection function and would, in effect, completely vitiate the connection function. Thus, the Federal Circuit agreed that no reasonable jury could find that the accused device was only insubstantially different than the claimed invention.
The Court also addressed the §112(6) issue raised by both parties, i.e., whether the claimed “actuation means” limitation was properly construed as a means-plus-function limitation. While noting the word “means” invoked a rebutable presumption that §112(6) applied, the Court found that the claim recited sufficient structure for performing the claimed function, such that the presumption was overcome. Although the Court found the district court had erred in construing the “actuation means” limitation to be a means-plus-function limitation, it found the error was harmless since both parties agreed that the scope of the claim would be identical, whether under the doctrine of equivalents or under the literal scope of structural equivalents accorded a means-plus-function claim element.
Going Way Out on a Limb, the Federal Circuit Construes “Within” to Mean “Inside”
By Matthew Weil
In an opinion unlikely to send shockwaves through the legal community, the Federal Circuit has construed “within” to mean “inside.” TI Group Automotive Systems (North America), Inc. v. VDO North America, L.L.C., Case Nos. 02-1630, 03-1482 (Fed. Cir. June 30, 2004) (Linn, J.).
TI Group’s patent is directed to an in-tank fuel assembly for fuel-injected engines. The assembly provides a constant and reliable supply of fuel even when the fuel in the fuel tank is low, when the vehicle is navigating a sharp turn, traveling over a steep incline, and so on.
TI Group sued VDO North America and other auto parts manufacturers for infringing the TI Group patent. Following a trial in the District of Delaware, the jury found infringement and awarded TI Group $10 million. VDO moved for judgment as a matter of law (JMOL) that the patent was not infringed. The district court granted the JMOL and this appeal followed.
One of the key claim construction issues on appeal was the meaning of the term “within.” The claims recite a “pumping means” described as being located “within” a fuel reservoir. On the accused product, the pumping means did not lie completely inside the fuel reservoir.
The district court construed “within” to mean “inside.” On appeal, TI Group argued that the district court’s definition of the term “within” was unnecessarily narrow. Offering competing dictionary definitions, TI Group urged the Court to adopt the definition “in the limits of, not outside or beyond” (citing The Oxford English Dictionary (OED)) or “in the limits or compass of; not beyond” (Webster’s Third New International Dictionary). VDO pointed instead to the definitions reciting “in the inner part or interior of” (OED) or “on the inside or on the inner side” (Webster’s). The Federal Circuit agreed with the district court that the ordinary and customary usage of within (meaning “inside”) governed absent some indication otherwise from the specification or the claims. Agreeing, too, that such an element was lacking in the accused devices, the Federal Circuit affirmed the JMOL of non-infringement.
As to several other claim terms in dispute; however, the Federal Circuit, exercising its de novo review, disagreed with the district court, holding that the terms should be construed more broadly. The Court also remanded the case to consider whether TI Group’s patent might indeed be invalid on the basis of the broader construction.
Patents / Claim Construction / Doctrine of Equivalents
All Elements Rule Precludes Infringement of Cyclosporin Patent
By Astrid Spain
Reversing a district court’s claim construction of Novartis’ patent relating to pharmaceutical cyclosporin compositions, the U.S. Court of Appeals for the Federal Circuit nevertheless upheld the district court’s ruling of non-infringement, noting that the “all elements” rule precluded Novartis’ theory of infringement by equivalents. Novartis Pharms. Corp. v. Abbott Labs., Inc., Case Nos. 03-1367, -1393 (Fed. Cir. July 8, 2004) (Prost, J.) (Bryson, J., dissenting).
Novartis sued Abbott, alleging infringement of U.S. Pat. Nos. 5,342,625 (the `625 patent) and 6,007,840 (the `840 patent), both relating to pharmaceutical cyclosporin compositions administered to prevent organ rejection in transplant patients. A jury found that Abbott did not infringe the `625 patent, but did infringe a claim of the `840 patent under the doctrine of equivalents. Abbott moved for a judgment as a matter of law (JMOL) that it did not infringe the `840 patent.
The claim in issue recites a pharmaceutical cyclosporin composition that additionally contains a hydrophilic component, a “lipophilic component” and a hydrophilic surfactant. Abbott’s accused cyclosporin formulation, Gengraf, allegedly contained only hydrophilic excipients and the surfactant Span 80, asserted by Abbott not to be a “lipophilic component.” Relying, inter alia, on the specification of the `625 patent, the district court concluded that surfactants cannot be components of the lipophilic phase and found, as a matter of law, under the specific exclusion principle, that Novartis was precluded from urging Span 80 to be an equivalent to the claimed “lipophilic component.” Accordingly, the district court concluded that Novartis could not prevail under the doctrine of equivalents and granted Abbott’s JMOL on the `840 patent. Novartis appealed.
The Federal Circuit rejected Abbott’s argument that collateral estoppel would preclude Novartis from challenging the claim construction and the JMOL with regard to the `840 patent because Abbott had not met its burden of showing that the district court’s claim construction of the term “lipophilic component” was necessary to the jury’s non-infringement decision for the `625 patent. Then, turning to the construction of the claim term in issue, the Court found that “lipophilic component,” had no “well-defined” meaning to those skilled in the art and proceeded to consider based on the `840 patent specification teaching that a surfactant may serve as a co-solvent to form a part of the lipophilic phase that dissolves the cyclosporin. Based on this teaching, the Court reversed the district court’s conclusion that surfactants cannot be components of the lipophilic phase. Nevertheless, while agreeing with Novartis that surfactants may form a part of the lipophilic component, the Court pointed to the same language as showing that the lipophilic component cannot be composed entirely of surfactants and therefore affirmed the district court.
In his dissent, Judge Bryson argued that the specification did not contain a specific exclusion of Span 80 as the “lipophilic component.”
Patents / Appellate Jurisdiction / Claim Construction
Dismissal without Prejudice May Be Final Judgment; the Term “Circuit” Denotes Structure Sufficient to Avoid §112, ¶6 Interpretation
By Firasat Ali, Daniel Foster and Arturo Sandoval
The U.S. Court of Appeals for the Federal Circuit, following vintage case U.S. Supreme Court precedent, held that dismissal of a case without prejudice is a final judgment under the final judgment rule and is therefore appealable. Linear Technology Corp. v. Compala Linear Corp., Case Nos. 02-1569,-1576 (Fed. Cir. Jun. 17, 2004) (Linn, J.).
This case involved a patent related to switching voltage regulators. In 1997, Linear sued various companies for patent infringement. In 1999, the district court issued a claim construction order construing all asserted claims. In 2001, a different court issued an order granting summary judgment of non-infringement in favor of one of the defendants, Maxim Integrated Products but denying Maxim’s cross-motion for summary judgment that a certain Ronald Vinsant was the inventor of the patent-at-issue. The district court had earlier issued the claim construction order, and then later entered final summary judgments under Fed. Rule of Civ. Proc. 54(b) in favor of three defendants including Maxim. It also issued an order certifying an interlocutory appeal of the claim construction determinations for a fourth defendant, Analog Devices, Inc. Analog had not sought summary judgment therefore no judgment was entered concerning it.
Linear and Analog unsuccessfully sought permission from the Federal Court to proceed with the interlocutory appeal. The Federal Circuit also dismissed the appeals as to the three defendants who had received final summary judgments of non-infringement. Subsequently, Analog and Linear stipulated to the dismissal of all claims against Analog without prejudice. The remaining parties sought re-entry of the summary judgments and the district court entered new final judgments of non-infringement in favor of the remaining defendants. Linear then settled with one defendant leaving Maxim and the inventor, Vinsant (a counterclaim defendant) as the only remaining adverse parties in the litigation. Linear again appealed the summary judgment in favor of Maxim.
Maxim objected to the appeal, arguing that the court lacked jurisdiction because, under Rule 54(b), there had been no final judgment adverse to Analog due to the stipulated dismissal without prejudice. The traditional rule in federal courts has prohibited piecemeal litigation and permitted appeals only from final judgments. At the time the first appeal was lodged, Analog remained a party to the litigation with Linear’s unresolved infringement claims pending against it. Thus, the Federal Circuit reasoned, Linear’s earlier appeal was rightfully denied because one of the parties (Analog) had an interlocutory appeal pending rendering the whole litigation unappealable under the final judgment rule. However, now that Analog was dismissed without prejudice, Linear’s new appeal presented the Federal Circuit with a final appealable judgment giving the court jurisdiction under 28 U.S.C. §1295(a)(1).
Turning to the merits of the appeal, the patent in issue is directed to “switching” voltage regulators, which are devices having switches (transistors) that are turned on and off in such a manner as to provide a predetermined and constant voltage output from a fluctuating input voltage source. To ensure a steady flow of current pulses, control circuitry is used to turn the transistors on and off. The patent discloses a “sleep mode” where switching transistors are turned off to reduce the power consumed by the regulator itself to improve the regulator’s efficiency. The patent also discloses a current reversal prevention mode where the regulator prevents a reverse flow of electrical current to prevent power from being drained from the load.
The parties disputed whether certain “circuit” and “circuitry” limitations in the patent claims were means-plus-function limitations. The district court rejected Linear’s expert testimony that the word “circuit” used in the claim would be understood by persons of ordinary skill in the art to connote sufficient structure to perform the recited function, and ultimately concluded that these limitations were means-plus-function limitations subject to §112, ¶6.
The Federal Circuit reversed. The Court began its analysis by noting that a claim term that does not use the word “means” triggers the rebuttable presumption that §112, ¶6 does not apply. The district court’s failure to apply this presumption was found to be legal error. Rather, the district court should have imposed on Maxim, which advocated a §112, ¶6 construction, the burden of overcoming the presumption by demonstrating that the claim fails to “recite sufficiently definite structure” or recites a “function without reciting sufficient structure for performing that function.”
Next, the Court proceeded to analyze the claim terms in issue, along with the description, finding that the claim term “circuit,” together with the functional recitation, provided structural meaning to persons of ordinary skill in the art. Thus, applying the presumption, the Court held that §112, ¶6 did not apply to the “circuit” limitation. Accordingly, the district court’s holding to the contrary was found to be in error. On that basis, the grant of summary judgment was vacated and case was remanded.
Practice Note
A request for rehearing on the §112, ¶6 issue has been filed by Maxim.
Patents / Doctrine of Equivalents
Bright Line Analysis Found Insufficient to Assess Equivalents for Tumor Detection Patent
By David Gay, Ph.D.
Upholding summary judgment of no literal infringement, the U.S. Court of Appeals for the Federal Circuit reversed summary judgment of non-infringement under the doctrine of equivalents reasoning that the accused tumor diagnostic fell within a grey area, which the district court failed to consider. Goldenberg v. Cytogen, Inc., Case No. 03-1409 (Fed. Cir. June 23, 2004) (Gajarsa, J.) (Prost, J., concurring-in-part, dissenting-in-part).
Immunomedics sued Cytogen alleging infringement of U.S. Pat. No. 4,460,559 (the `559 patent) both literally and under the doctrine of equivalents. The claimed invention is directed to a method for detecting tumors by targeting intracellular marker substances associated with tumor cells using a radio labeled antibody. Cytogen’s ProstaScint targets tumors using an antibody specific to an intracellular portion of prostate specific membrane antigen (PSMA), and a transmembrane antigen having both an intracellular and extra cellular domain.
The district court construed the term “intracellular marker substance” to mean an antigen existing within a cell, relying on the intrinsic record repeatedly distinguishing intracellular antigens from cell surface antigens. Granting summary judgment of non-infringement, the district court characterized PSMA to be a cell surface antigen, finding it to be outside the literal scope of the claims. Immunomedics’ argument that PSMA could be both a cell surface and intracellular marker substance was found insufficient to show equivalence because it did not address the distinction between cell surface and intracellular antigens.
Affirming the district court’s construction, the Federal Circuit rejected interpretations that included portions of an antigen located inside a cell, reasoning in part, that the `559 patent describes 26 antigens wholly within the cell and suitable as marker substances and is silent as to the use of antigen portions. Relying on dictionary definitions for the meaning of “intracellular,” the Court concluded that an intracellular marker substance must be wholly internal to a cell, affirming no literal infringement because PSMA does not exist wholly within a cell.
Reversing summary judgment of no infringement by equivalence the Court rejected the view that antigens are categorized as either cell surface or intracellular and that an antigen not falling into either category such as PSMA cannot be an equivalent as a matter of law. The Court reasoned that transmembrane antigens appear to be in a category not addressed by the `559 patent and PSMA could be found an equivalent to either category. Finding that Immunomedics presented a sufficient factual dispute, i.e., whether the PSMA-specific antibody in ProstaScint functioned to target a tumor cell by binding to an antigen located in a cell, the Court remanded the case for further proceedings.
Concurring on the issue of equivalents infringement, Judge Prost dissented with respect to the issues of claim construction and no literal infringement. Viewing references to subunits in the patent as a fragment, Judge Prost’s claim construction would encompass portions of an antigen located inside the cell.
Patents / Summary Judgment / Prior Art
Summary Judgment Improper Where Date of Prior Art Publication Is Disputed Issue of Fact
By David Beckwith
Reversing a summary judgment of invalidity on the grounds of obviousness, the U.S. Court of Appeals for the Federal Circuit held that a genuine factual dispute existed where specific facts were presented that raised issues of credibility of the declarants relied on to establish the date of a prior art publication. Typeright Keyboard Corp. v. Microsoft Corp. Case No. 03-1197,1255 (Fed. Cir. July 6, 2004) (Dyk, J.).
Typeright sued Microsoft for infringing U.S. Pat. Nos. 5,372,411 (the `411 patent) and 5,503,484 (the `484 patent), which claim an ergonomic keyboard featuring a v-shaped design with separate right and left hand key clusters. Microsoft responded that all of the asserted claims were obvious, based on a one page undated document created by a German company, Marquardt. The district court granted summary judgment, holding the claims to be invalid for obviousness, relying on the testimony of two fact witnesses (both paid by Microsoft for their time testifying) who expressed their belief that the Marquardt document was made available at a trade show in 1986, four years before the priority date of the patents. Microsoft did not submit any evidence or testimony obtained directly from Marquardt on the timing of publication. Microsoft also offered a non-translated 1986 report prepared for Marquardt that it contended contained photos of wooden prototypes of the keyboards similar to those shown in the Marquardt document. The report’s author also testified the prototypes were displayed at the 1986 trade show. Typeright appealed.
The Federal Circuit concluded that in view of discrepancies and claims of bias raised by Typeright relating to the testimony of declarants relied on by Microsoft summary judgment was improper, particularly in light of the applicable clear and convincing evidentiary standard. The Court noted, as contested issues of fact, the following: the Marquardt document is undated and was discovered in a witness’ file dated 1990 – although the witness remembers receiving the document at the 1986 trade show; the testimony related to events occurring over 18 years ago which suggests possible faulty recollection; the testimony was tentative – one witness testified seeing photographs “similar” to the Marquardt document distributed at the 1986 tradeshow, while the other witness, when asked if the Marquardt document was handed out at the 1986 tradeshow, testified “I think so, yes”; an inquiry made to Marquardt regarding a number printed on the document that may have led to the date of release, yet Microsoft failed to provide this information; Marquardt filed two patent applications in 1991 for similar keyboards which would have been invalid if the Marquardt document was actually published in 1986; and finally, both of Microsoft’s witnesses received compensation for their time spent testifying.
While noting that the issue was a close one, and that summary judgment cannot be denied simply because an opponent argues the moving party’s witnesses are not to be believed, the Federal Circuit found the specific facts identified in opposition raised doubts as to whether the Marquardt document was published prior to the critical priority date of the patents in suit. The Federal Circuit stated that if the jury finds the testimony of Microsoft’s witnesses credible and sufficient to establish that the Marquardt document was published prior to the priority date of the patents in suit, the district court will still have to address whether the legal requirement of corroboration has been met.
“America’s Favorite Pasta” Is Mere Puffery—Not False or Misleading Advertising
By David Stein
The U.S. Court of Appeals for the Eighth Circuit affirmed the district court’s ruling that the phrase “America’s Favorite Pasta” was not actionable false or misleading advertising under the Lanham Act, but rather constituted non-actionable puffery as a matter of law. American Italian Pasta Company v. New World Pasta Company, Case No. 03-2065 (8th Cir. June 7, 2004),
American Italian sells dried pasta products with the phrase “America’s Favorite Pasta” on its packaging. New World sent American Italian a cease and desist letter demanding that American Italian stop using that phrase. American Italian brought a declaratory judgment action, and New World counterclaimed for, among other things, violations of the Lanham Act. The district court dismissed New World’s counterclaim and declined to exercise jurisdiction over its state law claims. New World appealed.
The Eighth Circuit affirmed, noting that a statement of fact is a specific, measurable claim or one that can be reasonably interpreted as being a factual claim (i.e., one capable of verification). A statement constitutes puffery, on the other hand, if it is not specific and measurable and cannot reasonably be interpreted as providing a benchmark by which the veracity of the statement can be ascertained. Applying this distinction, the court concluded that the phrase “America’s Favorite Pasta,” standing alone, is not a statement of fact because the term “favorite” connotes the subjective and vague notions of being well liked and admired; it does not provide an empirical benchmark by which the claim can be measured.
The court next considered whether the context in which the phrase “America’s Favorite Pasta” is used transforms it into a statement of fact. The court found that it does not because the phrase as it is used on the packaging is “unquantifiable and subject to an individual’s fancy.” In other words, the phrase does not convey a benchmark for “America’s Favorite Pasta”; rather, the court found it is “vague, entirely subjective, and a bare assertion of product superiority.”
Finally, the Eighth Circuit considered a consumer survey submitted by New World, which, according to New World, showed that the phrase “America’s Favorite Pasta” conveyed that American Italian’s pasta brand was nationwide (it is not) and was the number one selling pasta (it is not). The Eighth Circuit, citing Mead Johnson & Co. v. Abbott Laboratories, as persuasive authority, found that allowing a consumer survey to determine a claim’s benchmark would create uncertainty and unpredictability in the market place, and could chill commercial speech, because an advertiser attempting to put forth a puffing statement could be “blind-sided” by a consumer survey that defined the advertising statement differently, thereby subjecting it to unforeseen liability.
Trademarks / Preliminary Injunctions
The Federal Circuit Upholds Grant of Preliminary Injunction in Trademark Case
By John Dabney
The U.S. Court of Appeals for the Federal Circuit affirmed a district court’s grant of a preliminary injunction prohibiting the defendant from using the mark “CROSSBOW” to sell exercise equipment. Nautilus Group, Inc. v. Icon Health & Fitness, Inc., Case No. 03-1526, 2004 U.S. App. LEXIS 12104 (Fed. Cir. June 21, 2004) (Shall, J.).
The plaintiff owns the trademark BOWFLEX for exercise equipment. The defendant used the mark CROSSBOW for exercise equipment. The district court awarded a preliminary injunction to the plaintiff, reasoning that the parties’ marks were similar and there was evidence of actual confusion and the defendant’s bad faith intent.
The Federal Circuit affirmed, but only after rejecting the basis on which the district court made its ruling. The Federal Circuit disagreed with the district court that there was evidence of bad faith. Rather, the Court found the evidence demonstrated that the name CROSSBOW was chosen because the defendant’s product resembled a crossbow. The Federal Circuit also disagreed with the district court that stray comments from customers about the two products were evidence of actual confusion. “It was improper for the district court to consider this scant and ambiguous evidence of actual confusion in favor of [plaintiff] for purposes of granting a preliminary injunction.” Finally, the Court repudiated the district court’s finding that the parties’ marks were similar, holding “we agree with [defendant] that the marks are not that similar.” But the Federal Circuit then inexplicably refused to reverse the injunction. The Court reasoned that some of the other likelihood of confusion factors weighed in favor of the injunction, including the strength of the plaintiff’s mark and the similarities in the parties’ products and marketing channels.
Passive ISP Not Liable for Posting of Copyrighted Material by Subscriber
By Annie Brose
Addressing the issue of an internet service provider’s liability for copyright infringement of materials posted on its website, the U.S. Court of Appeals for the Fourth Circuit recently affirmed a district court’s grant of summery judgment in favor of the ISP where it posted the infringing materials at the direction of a customer. CoStar Group, Inc. v. LoopNet, Inc., Case No. 03-1911, 2004 U.S. App. LEXIS 12123 (4th Cir. June 21, 2004).
The defendant, LoopNet, is an ISP whose website allows subscribers, generally real estate brokers, to post listings of commercial real estate on the internet. The plaintiff, CoStar Group, is a national provider of commercial real estate information which maintains a database of information on commercial real estate markets and commercial properties. Although not an ISP in the traditional sense, LoopNet provides a “web hosting service” that allows users to post real estate listings, many of which include photographs of the properties, on its website. When submitting listings to LoopNet, users complete a form agreeing to the site’s terms and conditions. If the user also intends to include photographs with the listing, he or she is required to agree to further terms and conditions, expressly verifying that all necessary authorization to post the photograph has been obtained from the copyright owner. After a photograph has been submitted, a staff member at LoopNet reviews the photograph to determine if it actually depicts commercial real estate, and if it displays any obvious evidence that another party owns the copyright, such as a copyright notice or other textual indication.
CoStar brought suit for copyright infringement when it determined that some of its copyrighted photographs were posted by LoopNet subscribers on the LoopNet website. The district court granted LoopNet’s motion for summary judgment concluding that LoopNet had not engaged in direct infringement because as an ISP, LoopNet is merely the owner and manager of a system used by others who are violating CoStar’s copyrights and not performing the actually copying itself.
On appeal, the Fourth Circuit affirmed the decision, noting its preference for the approach of the court in Netcom which requires “volition or causation” on the part of the alleged infringer. Under these circumstances, the court did not believe that LoopNet’s actions of cursorily reviewing the photographs before posting them rose to the level of infringing conduct required by the Copyright Act. The court analogized LoopNet’s actions as similar to those of the owner of a traditional copying machine whose customers operate the machine themselves to make the copies.
Additionally, the court addressed CoStar’s argument that the Digital Millennium Copyright Act (DMCA) supplanted Netcom, and thus LoopNet’s defense must rely exclusively on the ISP safe harbor immunity provided therein. The Court disagreed with this interpretation and held that the DMCA safe harbor provision should only come into play when it is determined that an ISP is liable for copyright infringement. In this case, LoopNet’s passive conduct did not rise to the level of infringement, and therefore the DMCA analysis was not necessary.
Copyrights / Statute of Limitations
“Continuing Wrong” Theory Does Not Avoid Statute of Limitations
By Ellie Hourizadeh
The U.S. Court of Appeals for the Sixth Circuit upheld the district court ruling barring claims of contributory infringement for activity that occurred more than three years prior to the filing of the complaint. The court also held that equitable estoppel is not a valid basis for avoiding the limitations bar. Bridgeport Music v. Diamond Time, Ltd., et al., Case Nos. 03-5003/5656 (6th Cir. June 18, 2004) (Ralph B. Guy, Jr., J.).
TVT Records hired Diamond Time to handle clearance of a sample of a sound recording. A “sample” is a piece of an existing sound recording used as the basis for a new composition. Diamond Time negotiated an agreement between Bridgeport, the owner of the sound recording, and TVT. Diamond Time sent the agreement to TVT for signature but the agreement was never executed. More than five years later, Bridgeport filed a complaint for copyright infringement against TVT and contributory infringement against Diamond Time. The plaintiff claimed that Diamond Time was liable as a contributory infringer because it failed to shepherd the clearance process through execution of the written release and therefore, materially contributed to direct infringement by TVT. The plaintiff’s argument rested on a “continuing wrong” theory. The plaintiff argued that “the defendant’s conduct outside the limitation period contributed to direct infringement by another party within the limitations period.” The district court held that the plaintiff may not “piggy back” the defendant’s conduct outside the statute of limitations period onto the actions of another within the period. Bridgeport appealed.
The Sixth Circuit affirmed, rejecting the plaintiff’s argument and holding that claims against contributory infringers, like claims against direct infringers, are subject to a three year statute of limitations. The court also held that equitable estoppel was not a valid basis for avoiding the statute of limitations. Initially, the plaintiff asserted a claim for equitable estoppel based on fraudulent concealment. On appeal, the plaintiff shifted its equitable estoppel claim to argue that the defendant’s misconduct “lulled them [plaintiff] into believing it was not necessary for them [plaintiff] to commence litigation.” The Sixth Circuit held that it was not reasonable to forego litigation for more than five years after the agreement had been forwarded to TVT for signature.
Patents / Appellate Jurisdiction
Interlocutory Denial of Sovereign Immunity Is Not an Appealable Issue for Compulsory Counterclaims
By Christopher Bright
The U.S. Court of Appeals for the Federal Circuit has decided that a denial of a motion to dismiss compulsory counterclaims based on sovereign immunity is not a collateral order that is appealable where the district court has yet to determine the legal sufficiency of the counterclaims. Competitive Technologies, Inc. v. Fujitsu Ltd., No. 03-1380 (Fed. Cir. June 30, 2004 ) (Dyk, J.).
Along with its licensee, Competitive Technologies, Inc. (CTI), the University of Illinois filed suit against Fujitsu and other parties, alleging patent infringement. The defendants asserted state-law counterclaims of, among other things, unfair competition and abuse of process in connection with the allegedly baseless filing by the University and CTI of an International Trade Commission (ITC) action based on the same patents, previously dismissed by the ITC. The district court denied the University’s motion to dismiss the defendants’ state law counterclaims under the Eleventh Amendment, on the grounds that the University waived its sovereign immunity by filing a patent infringement suit based on the same transaction or occurrence as the University’s asserted patent claims, i.e., the counterclaims were compulsory.
The Federal Circuit sua sponte dismissed the appeal, finding that it lacked jurisdiction under 28 U.S.C. §1291 because the judgment was not final and not a collateral order. Applying the U.S. Supreme Court collateral order doctrine test found in Cohen v. Beneficial Industrial Loan Corp., the Federal Circuit reasoned that the first requirement of the Cohen test was not satisfied because the district court’s decision did not “conclusively determine the disputed question.” As noted by the Federal Circuit, the district court’s decision itself indicated it was subject to reconsideration based on the legal sufficiency of the counterclaims, and therefore, its order did not conclusively determine the issue of waiver of sovereign immunity.
