Federal Circuit Blog

Grant of Voluntary Dismissal Without Prejudice Late in Case Was Not Abuse of Discretion; Dimissal of “the action” is Dismissal of the Entire Action

Walter Kidde Portable Equip., Inc. v. Universal Security Instruments, Inc., __ F.3d __ (Fed. Cir. Mar. 2, 2007) (Gajarsa, Moore, JORDAN) (M.D.N.C.: Tilley)

KEY WORDS:  DISMISSAL, RULE 41, PREJUDICE (NO), WAIVER (YES), STANDING (N/A), HARMLESS ERROR (YES)

Fed Cir affirms grant of voluntary dismissal, without prejudice, of Kidde’s claims.  After USI raised question about Kidde’s standing in the district court and won some key pre-trial rulings, Kidde got the “action” dismissed (then fixed its alleged standing problem and filed a new suit).  The Fed Cir first decided it had jurisdiction because dismissal of “the action” is dismissal of the entire case, and not just of the complaint.  For the standard of review, the Fed Cir followed regional circuit law, applying an abuse of discretion standard to the dismissal of Kidde’s claims, but a de novo review to the dismissal of the counterclaims because a legal error was alleged there.  [Note: It may have been better for the Fed Cir to apply an abuse of discretion standard to both issues, and then to have noted that a legal error is one way in which a court abuses its discretion.]  On the merits, the dismissal of the claims was not an abuse of discretion because much of the work in the first case could be reused in the second, so that USI’s argument about wasted effort was simply wrong.  Also, USI had not explained below how losing the benefit of the court’s pre-trial rulings prejudiced it (so the points were waived).  The dismissal of the counterclaims was error because they involved separate issues of unfair competition and tortuous interference (and even dismissal of the patent counterclaims may have been error), but it was harmless because (a) USI could raise the issues in the second action, (b) USI asserted the “work product” doctrine in refusing the tell the court any reason there would be prejudice [a unique tactic], and (c) the pre-trial in limine rulings were necessarily preliminary and thus did not grant any rights.  Finally, the district court erred in granting the motion before it addressed standing, but the error was harmless because a remand would send the case to the same result.

District Court Stay Must Remain in Effect Until All Judicial Review Ends From ITC Proceeding

In re Princo Corp., __ F.3d __ (Fed. Cir. Mar. 1, 2007) (Bryson, Linn, DYK) (S.D.N.Y.: Brieant)

KEY WORDS:  CHOICE OF LAW, MANDAMUS, APPELLATE JURISDICTION, STAY

Fed Cir grants writ of mandamus requiring district court to stay its action until parallel ITC action is finished.  Both the ITC case and this case had previously been on appeal and remanded.  Applying its own law, the Fed Cir first refused to decline jurisdiction simply because the district court’s ruling was procedural and unrelated to patent law, since the ruling could directly affect the ITC proceeding via collateral estoppel effect.  On the merits, the Fed Cir determined that the phrase “until the determination of the Commission becomes final” in Section 1659 means “finality including judicial review,” consistent with other courts’ interpretation of most other similar provisions in the law, and consistent with the purpose of the statute (i.e., preventing parallel proceedings).  The Fed Cir rejected respondent Phillips’ arguments that (1) relief here is meaningless because only computing damages (which the ITC does not do) remains in the district court (the statute draws no such line); (2) the issues are all different between the district court and the ITC (Phillips is just wrong); (3) Princo waived its rights (Princo’s initial request for a stay was timely made, and Princo diligently pursued reinstatement of the stay when the district court lifted it); and (4) Princo waived by filing a summary judgment motion (Princo couldn’t be expected to gamble that the stay would be granted).

Abandonment of Appeal Did Not Kill Cross-Appeal; Party Did Not Show Excusable Neglect for Missing Deadline

Firsthealth of the Carolinas, Inc. v. Carefirst of Maryland, Inc., __ F.3d __ (Fed. Cir. Feb. 27, 2007) (Bryson, Gajarsa, LINN) (TTAB)

KEY WORDS:  TRADEMARK, APPELLATE JURISDICTION (YES), EXCUSABLE NEGLECT

Fed Cir affirms dismissal of Firsthealth’s counterclaims to kill Carefirst’s trademarks (in an opposition brought by Carefirst).  The Board refused to accept late evidence from Firsthealth where its excuses involved the birth of counsel’s child, the significant amount of testimony in the case, time conflicts with other matters, and a docketing error.  As an initial matter, the Fed Cir did not lose jurisdiction when Carefirst dropped its appeal from the Board’s finding of no likelihood of confusion, because Carefirst could still cause “damage” based on the Board’s rulings.  On the merits, the Board was reasonable in adopting the Supreme Court’s standard for “excusable neglect” from Pioneer v. Brunswick, and did not abuse its discretion here.

Prosecution Disclaimer Applies Unless it is Rescinded with Crystal Clarity; Claim Construction is Not Required if it Would Not be Material to Disposition of the Case

Hakim v. Cannon Advent Group, PLC, __ F.3d __ (Fed. Cir. Feb. 23, 2007) (Michel, NEWMAN, Rader) (W.D. La.: James)

KEY WORDS:  CLAIM CONSTRUCTION (NARROW), PROSECUTION DISCLAIMER (YES), ANTICIPATION (YES), EXPERT TESTIMONY

Fed Cir affirms summary judgment of noninfringement for one patent and invalidity for anticipation of another. The patents cover spill-resistant drinking cups. For the first patent, the applicants had broadened the claims from reciting a "slit" in the cover to reciting an "opening"; the district court properly limited the claims to a slit, because the applicant, by telling the examiner only that he was broadening the claims, did not provide sufficient clarity to note that he was wiping out a distinction (i.e., slit) that he previously made when arguing over prior art in the parent case. [This is an important case, because I doubt many other patents have any plainer rescissions of their disclaimers.] On anticipation of the second patent, the Fed Cir first noted that the district court did not need to perform a claim construction because there was no indication that any particular construction would have changed the result. On the merits, the district court did not err in finding that the prior art disclosed a limitation that Hakim said it did not. Finally, there was no err in rejecting Hakim's proffered expert declaration because Hakim had never identified himself as an expert and had not filed an expert report, and there was no need for expert testimony in any event. (The district court had placed the word "technology" in quotes when referring to the "technology" in this case -- indicating that he saw "technology" to be less than descriptive of a sippy cup.)

Note: The Fed Cir unfortunately referred to "recapture" here, which may lead some to cite this case in the context of the well-known recapture doctrine for broadening during reissue. This case is very different.

Section 1498 Applies Where Contract Does Not Result in (Alleged) Infringement But Work Plan Prepared by contractor Does

Sevenson Environmental Servs., Inc. v. Shaw Environmental, Inc., ___ F.3d ___ (Fed. Cir. Feb. 21, 2007) (LINN, Dyk) (W.D.N.Y.: Arcara)

KEY WORDS:  28 USC 1498, CHOICE OF LAW, CONTRACT INTERPRETATION

Fed Cir affirms summary judgment dismissing suit because the U.S. government was the proper defendant under 28 USC 1498.  Shaw had a contract to perform environmental remediation, and the particular accused technique was proposed by Shaw in a work plan approved by the government, not in the contract itself.  Section 1498 applies if the work is "for the government" and "with the authorization and consent of the government."  The Fed Cir first determined that "for the government" simply means pursuant to a government contract, and does not require that the "primary purpose" of the contract be the infringing activity, or that the government chose the infringing method.  The work was "with the authorization and consent of the government" even though the contract did not require the infringing method, because the work plan (prepared by Shaw) that Shaw was required to follow did require (alleged) infringement.  Thus, Shaw had immunity under 28 USC 1498.  (The Fed Cir applied its own law to interpret the contract because it was a government contract and it dealt centrally with patents (or at least a small part of it did).)

Plaintiff May Unilaterally Dismiss Until Proper Service of Answer; Service By Fax Ineffective Unless Party Expressly Consents in Writing

RFR Indus., Inc. v. Century Steps, Inc., __ F.3d __ (Fed. Cir. Feb. 16, 2007) (Michel, Schall, PROST) (N.D. Tex.: Kinkeade)****
KEY WORDS: NOTICE OF DISMISSAL, FRCP 41, FRCP 5, SERVICE, ATTORNEY FEES, PREVAILING PARTY

Fed Cir vacates grant of judgment on the pleadings and reverses fee award to Century.  After RFR filed suit, Century answered, with service by fax (the parties were in another litigation in which they were serving by fax).  RFR then filed a notice of dismissal without prejudice under FRCP 41(a)(1)(ii).  The district court refused to dismiss without prejudice, and granted Century's motion for judgment on the pleadings under FRCP 12(c).   The Fed Cir held (applying regional circuit law) that FRCP 41 gave RFR a unilateral right to dismiss without leave of court, because Century's fax service was not proper service under FRCP 5(b)(2), absent express written consent from RFR.  The notice of dismissal ended the case without prejudice, so resolkving the case on the merits "was both improper and without effect."  For fees, the Fed Cir held "that a plaintiff's voluntary dismissal without prejudice pursuant to Rule 41(a)(1)(i) does not bestow 'prevailing party' status upon the defendant."  Slip op. at 7.  Because RFR can refile its action, there was no "judicially sanctioned" change in the parties' legal relationship, so that neither party acquired prevailing party status.

Permissive Interlocutory Appeal Granted Where Matters Are Intertwined With Issues in Pending Appeals

Regents of the Univ. of Cal. v. Dako N. Am., Inc., __ F.3d __ (Fed. Cir. Feb. 14, 2007) (LOURIE, Clevenger, Moore) (N.D. Cal.: Patel)****
KEY WORDS:  INTERLOCUTORY APPEAL, CERTIFIED ORDER, CLAIM CONSTRUCTION

Fed Cir grants Regents' consented petition for discretionary interlocutory appeal under 28 USC 1292(b), of a claim construction order certified by the district court.  In two related appeals still pending in the Fed Cir, the Regents challenged the district court's denial of its preliminary injunction motion based on certain claim constructions.  While these related appeals were pending, the district court revisited its claim constructions, granted partial summary judgment of noninfringement for Dako, and certified the order for permissive appeal.  Because the claim constructions issues in the certified order are already at issue in the related appeal, the Fed Cir reasoned that there is no risk of piecemeal appeals or premature reviews, and that the more complete record provided by the certified order further judicial efficiency.  "Because the matters in the recent order are thus intertwined with the issues in the pending appeals, we determine that granting the petition in these unusual circumstances is warranted."

Fed Cir Closes Door To Possible Defenses To Inequitable Conduct and On-Sale Bar

Cargill, Inc. v. Canbra Foods, Ltd., __ F.3d __ (Fed. Cir. Feb. 14, 2007) (Linn, Prost, JORDAN) (D. Ore: Mosman)
KEY WORDS:  INEQUITABLE CONDUCT, MATERIALITY, INTENT, BALANCING, MOTIVE, ON-SALE BAR, COMMERCIAL OFFER FOR SALE, READY FOR PATENTING, REDUCTION TO PRACTICE (ACTUAL)

Fed Cir affirms summary judgment of invalidity by on-sale bar for two patents, and affirms judgment of inequitable conduct for other two patents.  The patents relate to heart-healthy canola oil.

Inequitable conduct: 

Materiality:  By the "reasonable examiner" standard, two withheld documents -- a research report and certain test data -- were material because they contradicted  the patentee's representations during prosecution that the claimed canola oil exhibited properties superior to a prior art oil.  Although the withheld results may not have been comparable to the data before the examiner because the research report used unusual conditions and the test data document did not show the testing conditions, "[a] reasonable examiner would certainly want to consider test data that is directly related to an important issue of patentability, along with the applicant's interpretation of that data.  Whether the examiner would have ultimately allowed the patent to issue is irrelevant ...."  Slip op. at 9. 

Intent: The district court did not err in finding intent based on a number of circumstantial factors, including (i) the repeated nature of the omission, where "[a]n applicant should know information is material when the examiner repeatedly raises an issue to which the information relates," id. at 10; (ii) the patentee's motive to deceive, as long as "the district court did not rely solely on the applicant's motive in drawing an inference of intent," id. at 11; and (iii) the high degree of materiality of the undisclosed test data.  The patentee's good faith belief that the data did not need to be disclosed did not undermine the finding of intent, because "[e]ven if there were a mitigating explanation for the withheld data, it was no excuse for the applicant's purposeful omission in this case."  Id. While recognizing "that subjective good faith can support a defense to inequitable conduct," the Fed Cir ruled that "[w]hen an applicant knows or obviously should know that information would be material to the examiner, as was true here, but the applicant decides to withhold that information, 'good faith' does not negate an intent to manipulate the evidence. Indeed, self-serving manipulation of highly material evidence can hardly be called 'good faith.'"  Id. at 13.

Balancing:  The Fed Cir found no abuse of discretion in the district court's conclusion of inequitable conduct.

On-sale bar: 

Commercial offer:  A pre-critical date letter to a third-party was a sale/offer for sale, because the "letter explicitly sets forth an amount of oil to be delivered…, at a specified unit price, and under a standard contract designation, FOB (free on board), which allocates the risks and responsibilities of a buyer and a seller." Id. at 16.   In affirming the district court, the Fed Cir (i) relied on inconsistencies in the patentee's arguments that the letter only showed the provision of samples for testing purposes or the response to the customer’s concerns about costs; (ii) ruled that "expressing a desire to do business in the future does not negate the commercial character of the transaction then under discussion"; (iii) dismissed as irrelevant the customer’s failure to pay the agreed amount  because "[t]here is no requirement that the sale be completed" for the bar to apply; and (iv) ruled that a declaration submitted in opposition to the summary judgment motion did not create genuine factual disputes.

Ready for patenting:  The oil was ready for patenting because it was reduced to practice and the evidence indicated that the patentee was aware of its utility.  That the transacted oil was intended for experimental purposes was irrelevant, because "that does not mean that the invention had not been reduced to practice," and because the patentee's lack of awareness of the specific characteristics making the invention useful did not contradict a finding of actual reduction to practice.

Unclaimed Disclosure Must Be Clear And Precise To Effect Dedication To The Public

PSC Comp. Prods., Inc. v. Foxconn Int’l, Inc., ___ F.3d ___, ___ USPQ2d ____ (Fed. Cir. Jan. 20, 2004) (Mayer, Clevenger, GAJARSA) (C.D. Cal.: Pregerson)
KEY WORDS: PUBLIC DEDICATION; WRITTEN DESCRIPTION DISCLAIMER
Fed Cir affirms summary judgment of non-infringement. PSC’s patent claims metal clips for holding heat sinks to a microchip, and discloses that “[o]ther prior art devices use molded plastic and/or metal parts that must be cast or forged which again are more expensive metal forming operations.” The accused product is a plastic clip. Fed Cir explains that like claims, “[i]n an absence of compelling reason to do otherwise, the written description must also be interpreted according to the understanding of one of ordinary skill in the art.” Applying plain meaning under the rules layed out in Johnson & Johnston and Scimed, PCS’s disclosure of the molded plastic clip is a sufficiently clear and precise disclosure to dedicate plastic clips to the public. However, the “’disclosure-dedication’ rule does not mean that any generic reference in a written specification necessarily dedicates all members of that particular genus to the public. The disclosure must be of such specificity that one of ordinary skill in the art could identify the subject matter that had been disclosed and not claimed.” So, PSC’s other generic disclosure of “other resilient materials may be suitable for the strap” would not have been enough, in and of itself, to create a dedication. PSC's complaint that the metal limitation of the claim was inadvertant, making dedication of plastic to the public unfair, doesn’t fly because “[t]he patentee, rather than the public, must bear the burden of inadvertent errors in the patent-including inadvertent dedications.” The Fed Cir hypothesizes that this rule will not motivate patentees to draft sparse written descriptions, but will instead “motivate patentees to draw the broadest claims that they consider to be patentable, and to submit these broad claims to the PTO for examination.”
Decision
[This summary was authored by Dina Grinshpun]

To Claim An Antibody By Its Binding Affinity To An Antigen, The Antigen Must By Fully Characterized By Disclosure Or Deposition

Noelle v. Lederman, ___ F.3d ___, ___ USPQ2d ____ (Fed. Cir. Jan. 20, 2004) (Clevenger, Bryson, GAJARSA) (BPAI)
KEY WORDS: PRIORITY, WRITTEN DESCRIPTION, INTERFERENCE-IN-FACT, TWO-WAY TEST
Fed Cir affirms Board finding of no interference-in-fact and rejection of claims. Lederman’s issued patent describes and claims the human form of an antibody. Noelle’s application, a second continuation, is directed to mouse, human, and genus forms of the same antibody. Noelle admitted that if he could not claim priority to his original application, his claims would be rendered invalid by prior art, and the Board correctly found that Noelle could not claim priority. Priority: “An earlier application that describes later-claimed genetic mateiral only by a statement of function or result may be insufficient to meet the written description requirement.” Based on precedent established by Regents v. Lilly and Enzo Biochem, “as long as an applicant has disclosed a ‘fully characterized antigen,’ either by its structure, formula, chemical name, or physical properties, or by depositing the protein in a public depository, the applicant can then claim an antibody by its binding affinity to that described antigen.” And as the Fed Cir held in Utter and later cases, “a patentee of a biotechnological invention cannot necessarilty claim a genus after only describing a limited number of species because there may be unpredictability in the results obtained from species other than those specifically enumerated.” Here, Noelle did not describe the human antigen in his original application, but instead described only the mouse antigen, then claimed the mouse, human, and genus forms by citing to the ATCC number of the hybridoma secreting the mouse antibody. Because Noelle did not describe the human antigen, he basically claimed an unknown defined by its binding affinity to another unknown--and thus failed to satisfy the written description requirement.
Interference-In-Fact: Under Fed Cir precedent, a two-way patentability test is not required, rather: “In order for an interference-in-fact to exist, invention A must anticipate or make obvious invention B, and invention B must anticipate or make obvious invention A, thereby meeting both prongs of the ‘two-way’ test.” Under this test, the Board correctly found that a POSITA would not have a reasonably likelihood of success in isolating a human antibody from a mouse and vice versa. “A reasonable likelihood of success does not necessarily mean an absolute predictability, but rather a reasonable expectation of success.” Noelle cannot use the methods of isolating the human antigen disclosed in his original specification because that method was never claimed, so it is neither part of either parties’ inventions nor is it prior art (“A patentee’s invention is only found in a patentee’s claims, unless the patentee uses sufficient means-plus-function language to invoke [35 USC 112/6].”), and the PTO requires both parties to an interference to claim the same invention. Additionally, two of the three screening methods Noelle disclosed in his written description that would isolate the human antibodies require the use of a fusion protein, and the inventor of the fusion protein testified that it would have been unpredictable and unreasonable for a POSITA to be able to make the fusion protein at the time of Noelle’s first application. The inventor of the third screening method stated during prosecution that use of his expression cloning could not have led to successful isolation of the human antigen.
Decision
[This summary was authored by Dina Grinshpun]