Federal Circuit

February 1, 2021

Southern District of Indiana’s Dismissal of Patent Infringement Case Affirmed

Indianapolis, Indiana – The U.S. Court of Appeals for the Federal Circuit affirmed the dismissal of a suit originally filed by Tenstreet, LLC (“Tenstreet”) in the Southern District of Indiana. In the original suit, Tenstreet alleged that Defendant DriverReach, LLC (“DriverReach”), infringed its rights in United States Patent No. 8,145,575 (the “‘575 Patent”) for “Peer to Peer Sharing of Job Applicant Information.”

According to the District Court Order, Tenstreet developed a product called the Xchange™, which encompasses the ‘575 Patent that facilitated job applicant verification between past and prospective commercial truck driver employers. The product also apparently allows the applicant to review and correct information before it is sent to their prospective employer. Tenstreet claimed that DriverReach infringed the ‘575 Patent by selling an employment verification product, VOE Plus Solutions. DriverReach moved to dismiss the complaint on the ground that the ’575 Patent claims ineligible subject matter under 35 U.S.C. § 101, an abstract idea.

To analyze whether a patent claims an abstract idea, the court uses a two-step framework. First, it asks whether the claims at issue are directed to a patent-ineligible concept. If yes, the second step is to “search for an ‘inventive concept’” that ensures “that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.” Alice Corp. Pty. Ltd. v. CLS Bank Int’l., 573 U.S. 208, 217 (quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 72-73).

In this case, the Court found the invention claimed “nothing more than an abstract idea implemented on a computer.” After finding the claims directed to an abstract idea the Court proceeded to step two of the framework and found “no sufficient inventive technology to transform the abstract idea of collecting, organizing, and storing data on a generic computer into a patent-eligible application.” Therefore, the Court granted DriverReach’s Motion to Dismiss for failure to state a claim upon which relief can be granted and the Federal Circuit affirmed.

DriverReach has filed a motion seeking to recover $700,000 in attorney’s fees, claiming that this case is exceptional.

Practice Tip: According to 35 U.S.C. § 101, patentable subject matter is “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” However, the Supreme Court has held that “this provision contains an important implicit exception [:] Laws of nature, natural phenomena, and abstract ideas are not patentable.” Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 589 (2013) (quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 70 (2012). Continue reading

June 26, 2020

Federal Circuit Affirms Patents-in-Suit Unenforceable Due to Inequitable Conduct

By Overhauser Law Offices, LLC

Indianapolis, Indiana – Appellants, GS CleanTech Corporation and Greenshift Corporation (collectively “CleanTech”), appealed the U.S. District Court for the Southern District of Indiana’s finding that U.S. Patent Nos. 7,601,858 (the “‘858 patent”), 8,008,516 (the “‘516 patent”), 8,008,517 (the “‘517 patent”), and 8,283,484 (the “‘484 patent”) (together, the “Patents-in-Suit”) are unenforceable due to inequitable conduct. The U.S. Court of Appeals for the Federal Circuit affirmed.

Before joining CleanTech in 2006, David Cantrell founded Vortex Dehydration Technology (“VDT”). In June 2003, Mr. Cantrell sent an email to two Agri-Energy LLC (“Agri-Energy”) employees regarding how VDT’s oil recovery system may be applicable in an ethanol plant. He also included an operational cost spreadsheet and an image of the system. VDT representatives conducted tests with Agri-Energy’s ethanol syrup in early July 2003.

A proposal dated July 31, 2003 was emailed to multiple Agri-Energy employees on August 1, 2003 offering “Agri-Energy a No-Risk trial [of the] ‘Oil Recovery System.’” The proposal allowed Agri-Energy to use the unit for sixty days at which point it could purchase the system for $423,000 or return it to VDT. That proposal was not accepted, however, in early 2004 communications resumed and the system was installed in the Agri-Energy plant in May 2004.

January 13, 2020

Trademark Law: United States Court of Appeals for the Seventh Circuit Affirms Award of Over $17.3 Million

By Overhauser Law Offices, LLC

The United States Court of Appeals for the Seventh Circuit issued an opinion reversing the denial of attorney’s fees, remanding for an entry of a reasonable fee reward under 15 U.S.C. § 1117(a), and affirming all other aspects of the judgment of the district court in the case of 4SEMO.com Incorporated (“4SEMO”) versus Southern Illinois Storm Shelters, Inc. (“SISS”), et al. (collectively “Defendants”). While the Defendants originally sued 4SEMO in this case, the case was reconfigured as above for the July 2017 bench trial and decision, which was on appeal.

According to the opinion, 4SEMO began selling storm shelters manufactured by SISS in 2005. 4SEMO is a Missouri-based home-remodeling firm while Robert Ingoldsby and his brother Scott (the “Ingoldsbys”) run the Illinois based company, SISS. 4SEMO began marketing the storm shelters under a wordmark “Life Saver Storm Shelters” and a matching logo (the “Marks”) that it affixed to the shelters it sold in Missouri and Arkansas pursuant to an exclusive dealership agreement with SISS. The Ingoldsbys were granted a limited license to use the 4SEMO Marks for shelters marketed in southern Illinois. However, the Ingoldsbys violated the limited license by using the 4SEMO Marks on shelters sold throughout the country.

SISS sued 4SEMO for trademark infringement over the “Life Saver” wordmark, claiming they had used it prior to 4SEMO and that they had ownership of the wordmark. 4SEMO counterclaimed for trademark infringement and false endorsement, along with various state-law claims. After SISS’s claim did not survive summary judgement, 4SEMO’s counterclaims were tried to the bench and the district court found in favor of 4SEMO on all counts and awarded $17,371,003 in damages for profit disgorgement and $26,940 for breach of contract. However, 4SEMO’s motion for vexatious-litigation sanctions and attorney’s fees under 28 U.S.C. § 1927 and the Lanham Act, respectively, was denied.

October 31, 2019

Patent Office Updates Eligibility Guidelines for Patentability Under Section 101

By Overhauser Law Offices, LLC

October 17, 2019. The US Patent Office has issued an Update on “Subject Matter Eligibility.” These Guidelines are used by the Patent Office to determine whether patent claims are eligible for protection under 35 USC 101.

Patent claims satisfy § 101’s eligibility requirement unless they are directed to an abstract idea (or other ineligible principle) and fail to add any inventive concept. Alice Corp. Pty. Ltd. v. CLS Bank Intern., 573 U.S. 208 (2014). In particular, claims that recite a specific advance in computer technology—including, for example, an unconventional arrangement of computer components—are eligible.

It is notoriously unclear to understand how should be applied. For example , Judge Plager of the Federal Circuit (and former Dean of the School of Law and Indiana University – Bloomington) has stated that the “body of doctrine” is “incoherent,” “render[ing] it near impossible to know with any certainty whether [an] invention is or is not patent eligible.” Interval Licensing LLC, 896 F.3d at 1348 (Plager, J., concurring and dissenting). Other jurists have noted that the case law is “baffling,” “inconsistent,” and that “needs clarification by higher authority, perhaps by Congress.” Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC, 927 F.3d 1333, 1371 (Fed. Cir. 2019); Aatrix Software, Inc. v. Green Shades Software, Inc., 890 F.3d 1354, 1360 (Fed. Cir. 2018)

May 7, 2019

New Northern District of Indiana Judge to be Sworn In

By Overhauser Law Offices, LLC

Fort Wayne, Indiana – Former Attorney Holly Brady has been confirmed by the U.S. Senate to serve as judge in the Northern District of Indiana. Brady is only the second woman to serve as judge in the Northern District and the first judge to join the court in nine years. Brady will take the seat vacated in September 2017 by Judge Joseph Van Bokkelen.

Brady, a native Hoosier, received her undergraduate degree from Indiana University and went on to attend Valparaiso University School of Law. After graduating, Brady has worked in multiple Fort Wayne law firms in the fields of labor and employment law. Brady’s history of a strong federal practice made her a good candidate for the vacancy and she is expected to have a formal swearing-in ceremony in August.

October 27, 2017

Indiana Patent Litigation: Federal Circuit reverses District Court’s dismissal of Lifetime Industries’ Patent Infringement Suit

By Overhauser Law Offices, LLC

The Plaintiff, Lifetime Industries, Inc. (doing business as Boyd Corp.) had filed a patent infringement lawsuit in the Northern District of Indiana alleging that Defendant, Trim-Lok, Inc infringed patent no. 6,966,590, Two-Part Seal For A Slide-Out Room, which has been issued by the US Patent Office. The Court of Appeals for the Federal Circuit reversed the District Court’s dismissal and remanded back to the district for further proceedings.

Plaintiff owns the patent to a two-part seal for slide-out rooms in RVs. The seal prevents moisture, debris, and air drafts from entering the vehicle. Soon after two employees left Lifetime to work at Trim-Lok, a representative of Lifetime found an allegedly infringing Trim-Lok seal installed on a third party RV. Plaintiff alleged direct, indirect, and contributory infringement on the part of Trim-Lok, based on claims that Trim-Lok directly installed the seal, or supervised installation of the seal, or influenced the RV company to install the seal on their vehicles. The district court dismissed each claim, stating that Lifetime had not adequately argued the allegations.

October 20, 2017

Patentability of Amended Claims in IPR the Burden of the Petitioner’s Issue, Not the Patentee

By Overhauser Law Offices, LLC

A 7-4 of the en banc decision of the Federal Circuit concludes that the Patent Trial and Appeal Board improperly requires a patent owner in an inter partes review (IPR) to show that proposed amended patent claims are patentable before a motion to amend those claims will be granted,

In an unusually opinion, the deeply divided the Court produced five opinions, none of which had enough backers to constitute the opinion of the Court. The most thoughtful opinion was 68 pages opinion, but only agreed upon by five of the judges. It concluded 5-6 that the statute unambiguously prohibited imposing on the patentee a burden of showing patentability, requiring no deference to the PTAB rule under Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984). However, the opinion picked up two additional votes of Judges Dyk and Reyna, who concurred in the result based on an alternative rationale conceding the ambiguity of the statute but nonetheless denying deference to the PTAB rule.

March 22, 2017

Patent Law: Federal Circuit Rules on Two Eli Lilly Patent Cases

By Overhauser Law Offices, LLC

Washington, D.C. — The Federal Circuit ruled on two patent infringement decisions, Los Angeles Biomedical Research Institute v. Eli Lilly & Co. and Eli Lilly & Co. v. Los Angeles Biomedical Research Institute, that involve Indianapolis-based Eli Lilly and Company.

These companion cases pertain to a pharmaceutical patent, U.S. Patent No. 8,133,903 (“the ’903 patent”), owned by Los Angeles Biomedical. Also at issue is one prior art reference, International Patent Application No. WO 01/80860, published Nov. 1, 2001, common to both lawsuits.

Los Angeles Biomedical Research Institute v. Eli Lilly & Co. arose as an inter partes review of a decision by the Patent Trial and Appeal Board holding all claims of the ‘903 patent to be obvious. The Federal Circuit reviewed claims in a provisional application relating to a study involving rats in combination with a method in an uncited reference to convert those results to apply to humans. It held that the rat study and uncited conversion method did not support the claimed dosage for humans. It further concluded that claims directed to an underlying condition should not be construed broadly to treat symptoms of that condition, holding that the Board had not adopted the broadest reasonable interpretation of the claims but instead had adopted an overbroad interpretation. The panel remanding, stating:

The question remains whether a person of skill in the art would have had a reason to combine [the three cited references relating to the medical condition] and would have had a reasonable expectation of success from doing so. Because the Board’s obviousness analysis was based on an erroneous construction of the claim language and an overly broad interpretation of [one of the references], and because the Board did not address the record evidence summarized above, we remand for the Board to make new findings as to whether there was an apparent reason to combine the prior art references and whether that combination would have rendered [the treatment] obvious.

January 23, 2017

U.S. Court of Appeals Rules In Lilly’s Favor on Alimta Vitamin Regimen Patent

By Overhauser Law Offices, LLC

Indianapolis, Indiana – The U.S. Court of Appeals for the Federal Circuit has upheld the district court’s decision and ruled in favor of Eli Lilly regarding validity and infringement of the vitamin regimen patent U.S. Patent No. 7,772,209 for Alimta® (pemetrexed for injection).

In the case of Eli Lilly and Company v. Teva Parenteral Medicines, Inc., et al., the court affirmed the earlier district court’s rulings that the vitamin regimen patent is valid and would be infringed by the generic challengers’ proposed products. If the patent is ultimately upheld through all remaining challenges, Alimta would maintain U.S. exclusivity until May 2022, preventing marketing of generic products for as long as the patent remains in force. The Alimta compound patent remains in force through January 24, 2017.

In March 2014, the U.S. Court for the Southern District of Indiana upheld the validity of the vitamin regimen patent. In August 2015, the same court ruled in Lilly’s favor regarding infringement of the vitamin regimen patent.

March 10, 2016

Federal Circuit Patent Litigation: En Banc Federal Circuit Retains Its Rules of Patent Exhaustion

By Overhauser Law Offices, LLC

Washington, D.C. – The Federal Circuit, sitting en banc, reaffirmed its rules of patent exhaustion in a 10-2 decision. It concluded that the Supreme Court decisions in Quanta Computer, Inc. v. LG Electronics, Inc., and Kirtsaeng v. John Wiley & Sons, Inc., did not require any change in the law of patent exhaustion. The 99-page decision was consistent with the position argued in the amicus brief filed by the American Intellectual Property Law Association.

Specifically, the Federal Circuit held that a patentee, when selling a patented article subject to a single-use/no-resale restriction that is lawful and clearly communicated to the purchaser, does not give the buyer, or downstream buyers, the resale/reuse authority that has been expressly denied. Explaining that the ruling in Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700 (Fed. Cir. 1992) remains unchanged, Judge Taranto wrote the following:

Such resale or reuse, when contrary to the known, lawful limits on the authority conferred at the time of the original sale, remains unauthorized and therefore remains infringing conduct under the terms of § 271. Under Supreme Court precedent, a patentee may preserve its § 271 rights through such restrictions when licensing others to make and sell patented articles; Mallinckrodt held that there is no sound legal basis for denying the same ability to the patentee that makes and sells the articles itself. We find Mallinckrodt’s principle to remain sound after the Supreme Court’s decision in Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008), in which the Court did not have before it or address a patentee sale at all, let alone one made subject to a restriction, but a sale made by a separate manufacturer under a patentee-granted license conferring unrestricted authority to sell.

The Federal Circuit also held that a U.S. patentee, by merely selling or authorizing the sale of a U.S.-patented article abroad, does not authorize the buyer to import the article and sell and use it in the United States, which are infringing acts absent authority from the patentee. Explaining that the ruling in Jazz Photo Corp. v. International Trade Comm’n, 264 F.3d 1094 (Fed. Cir. 2001), remains unchanged, Judge Taranto wrote the following:

Jazz Photo’s no exhaustion ruling recognizes that foreign markets under foreign sovereign control are not equivalent to the U.S. markets under U.S. control in which a U.S. patentee’s sale presumptively exhausts its rights in the article sold. A buyer may still rely on a foreign sale as a defense to infringement, but only by establishing an express or implied license–a defense separate from exhaustion, as Quanta holds–based on patentee communications or other circumstances of the sale. We conclude that Jazz Photo’s no-exhaustion principle remains sound after the Supreme Court’s decision in Kirtsaeng v. John Wiley & Sons, Inc., 133 S. Ct. 1351 (2013), in which the Court did not address patent law or whether a foreign sale should be viewed as conferring authority to engage in otherwise infringing domestic acts. Kirtsaeng is a copyright case holding that 17 U.S.C. §109(a) entitles owners of copyrighted articles to take certain acts “without the authority” of the copyright holder. There is no counterpart to that provision in the Patent Act, under which a foreign sale is properly treated as neither conclusively nor even presumptively exhausting the U.S. patentee’s rights in the United States.

Judge Dyk filed a dissenting opinion, which was joined by Judge Hughes, that generally agreed with the position argued in the government’s amicus brief.

With respect to Mallinckrodt, Judge Dyk maintained that the decision was wrong from the outset and cannot now be reconciled with the Supreme Court’s Quanta decision. “We exceed our role as a subordinate court by declining to follow the explicit domestic exhaustion rule announced by the Supreme Court,” he added. With respect to Jazz Photo, he wrote that he would retain the ruling if read to say that a foreign sale does not always exhaust U.S. patent rights, but it may if the authorized seller failed to explicitly reserve those rights.

Background

Lexmark makes and sells patented ink cartridges for its printers. It sells cartridges under one plan that permits buyers to use them as they wish, and at a discounted price under a “Return Program” plan that limits buyers to a single use of the cartridge and requires the cartridges to be returned to Lexmark for recycling.

Lexmark brought infringement actions in the district court and the International Trade Commission against Impression Products and other makers of after-market ink cartridges for Lexmark printers. Most of the district court defendants settled the litigation with Lexmark.

As to Lexmark’s action against Impression Products, the district court entered a stipulated judgment on Impression Products motion to dismiss. It held that Lexmark’s patent rights in cartridges first sold in the United States were exhausted under Quanta, but that the rights were retained for cartridges first sold abroad under Jazz Photo.

On appeal, the Federal Circuit sua sponte granted en banc review of whether the appellate court’s ruling on conditional sales in the U.S. must be overruled in light of Supreme Court’s Quanta decision, and whether the appellate court’s Jazz Photo ruling on international exhaustion must be overruled in light of the Supreme Court’s ruling on copyright exhaustion in Kirtsaeng.