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Federal Circuit Review Provided by Patterson, Belknap, Webb & Tyler LLP

The following are reviews of Federal Circuit intellectual property cases decided the week ending January 31, 2003.

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WAIVER; DAUBERT; DAMAGES

Micro Chemical, Inc. v. Lextron, Inc. et al., No. 02-1155 (January 24, 2003).

Opinion by Plager, joined by Michel and Lourie

Following an admission of infringement, a jury trial was held on the issues of damages. Lextron appealed and the Federal Circuit affirmed

The Federal Circuit rejected Micro's waiver argument. The district court made in limine rulings both before and during the trial. That is all that was needed under the 2000 amendments to FRE 103 to preserve the right to appeal.

Lextron argued that the district court erred in allowing Micro's expert to testify. The Federal Circuit disagreed. Although the expert relied on facts disputed by Lextron, that is sufficient to satisfy the requirement of FRE 702(1) that an expert base his opinion on "upon sufficient facts or data." Where the experts rely on conflicting fact, "it is not the role of the trial court to evaluate the correctness of the facts underlying one expert's testimony." Additionally, the expert relied an acceptable methodology, the Georgia Pacific factors. And, the expert did not commit legal error by saying that a 1997 non-infringing modification was not available in 1994 when the hypothetical negotiation would have taken place. In making its ruling, the Federal Circuit indicated that it was not deciding whether or not its holding in Grain Processing (that a noninfringing alternative that was not actually on the market could have been "available" as a noninfringing substitute) applied in reasonable royalty cases.

http://www.fedcir.gov/opinions/02-1155.doc

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LOST PROFITS, REASSIGNMENT


Micro Chemical, Inc. v. Lextron, Inc., No. 02-1121 (January 29, 2003)
Opinion by Rader, joined by Schall and Bryson

The district court granted summary judgment that Micro was not entitled to lost profits and held a bench trial on a reasonable royalty. The Federal Circuit vacated the summary judgment and denied the motion to reassign the case on remand.

The district court held a later developed non-infringing machine to be an acceptable non-infringing substitute. The Federal Circuit disagree because the record shows that Lextron did not have the necessary equipment, know-how and experience to make that machine when infringement began. Instead, Lextron's chief engineer had to spend 984 hours designing it, 330 hour to test it, rejected 5 other potential designs. In addition, Lextron spent over 4 months converting to the new design and had problems during the switch over, including needing to seek a 120-day delay in the injunction.

The Federal Circuit also held that the district court erred in not allowing Micro to prove entitlement to lost profits due to a two-supplier market. The district court erred in using the wrong market (the tied market) from a patent misuse tying claim.

The Federal Circuit also denied the motion to reassign the case on remand. Two partially reversed judgments does not show that the district court displayed deep-seated favoritism or antagonism that would make fair judgment impossible.

http://www.fedcir.gov/opinions/02-1121.doc

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FRAUD ON STANDARD-SETTING ORGANIZATIONS; CLAIM CONSTRUCTION

Rambus Inc. v. Infineon Techs. AG, Nos. 01-1449, -2583, -1604, -1641, 02-1174, -1192 (January 29, 2003). Opinion by Rader, joined by Bryson. Dissenting opinion by Prost.

The Federal Circuit reversed a jury verdict in favor of the accused infringers. The district court had found that Rambus committed fraud under Virginia law by concealing pending patent applications that covered a JEDEC standard. The Federal Circuit reversed and remanded.

Rambus accused Infineon, a JEDEC member, of manufacturing infringing devices that practiced JEDEC's SDRAM and DDR-SDRAM standards. Rambus had participated in the early 1990s in JEDEC meetings concerning the design of the SDRAM standard, but withdrew from JEDEC before the DDR-SDRAM standard was designed. After withdrawing from JEDEC, Rambus used its pending patent applications to draft claims that would cover both the SDRAM and DDR-SDRAM standards. Infineon accused Rambus of using its participation in the JEDEC standard-setting procedure to manipulate JEDEC into creating a standard that would infringe Rambus's patents. The district court dismissed Infineon's claims based upon the DDR-SDRAM standard But the district court upheld a jury's verdict that Rambus had committed fraud on JEDEC in regard to the SDRAM standard. The Federal Circuit revered holdings that Rambus had complied with JEDEC's patent policy, and therefore, had no duty to disclose to JEDEC its intention to acquire patent coverage of the SDRAM standard. Since Rambus did not breach any duty to JEDEC, Infineon's fraud claim failed under Virginia law.

The Federal Circuit also reversed the district court's claim construction. During prosecution, Rambus's attorney had submitted four independent claims, three of which had limitations on the "integrated circuit device." In a general discussion, the attorney described all of the claims as limited by the limitations of the three claims, even though the fourth claim was not explicitly limited. The Federal Circuit held that the patent attorney's remarks were clearly erroneous, and therefore, the fourth claim's "integrated circuit device" should not be construed as limited by explicit limitations appearing in the other three claims.

The Federal Circuit also held that the attorney's remarks in an ancestor application regarding the claim term "bus" did not disclaim claim scope in the patent in suit, because the patent in suit was a divisional of the ancestor. The Federal Circuit held that it was clear from the prosecution history that the disclaimer applied to the inventions divided out and prosecuted in the ancestor and other related applications, but did not apply to the separate inventions in suit.

http://www.fedcir.gov/opinions/01-1449.doc

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CLAIM CONSTRUCTION; DOCTRINE OF EQUIVALENTS


Biogen, Inc. v. Berlex Labs. Inc. et al, Nos. 01-1058, 59 (January 31, 2003).

Opinion by Newman, joined by Friedman. Concurring opinion filed by Rader.

Berlex Labs appealed the district court's grant of Biogen's motion for summary judgment of non-infringement in a declaratory judgment action involving U.S. Patent Nos. 5,376,567 ("the '567 patent) and 5,795,779 ( "the '779 patent"). The Federal Circuit Affirmed in part, vacated in part and remanded.

Regarding the '567 patent, the Court examined the specification and found that it described only linked DNA sequences and transformation procedures using single constructs and did not describe or present details of any other configuration. The district court and the Federal Circuit found that linked co-transformation was not only the preferred embodiment but also the only one the specification supported. On the doctrine of equivalents, the Federal Circuit noted that the district court found that Berlex was estopped from asserting equivalence to the '567 claims because of arguments made in the prosecution of that patent. The Federal Circuit vacated and remanded in light of the Supreme Court's Festo test.

The primary issue with respect to the '779 patent was whether a numerical concentration limitation applied to intermediate as well as final versions of Biogen's accused products. The district court held that it is irrelevant that the Biogen composition passes through the claimed numerical range during its production, finding that it is the final product that determines infringement. The Federal Circuit agreed that the claim language, specification, and prosecution history supported a construction limiting the claim to a final product, thus affirming the District Court's judgment of non-infringement.

In his concurrence, Judge Rader addressed the majority's opinion regarding the doctrine of equivalents issue as to the '567 patent. Judge Rader asserted that since the '843 and '567 patents cannot concurrently recite patently "indistinguishable" claims of substantively different scope, the District Court should, on remand, for consideration of the Festo factors, fully consider arguments made by the patentee in the prosecution of the '843 patent to determine the issue of infringement by equivalents.

http://www.fedcir.gov/opinions/01-1058.doc

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The following is a review of Federal Circuit intellectual property cases decided the week ending February 21, 2003.
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CLAIM CONSTRUCTION; OBVIOUSNESS

Boehringer Ingelheim Vetmedica, Inc. v. Schering-Plough Corp. wt al., Nos. 02-1026, -1027 (February 21, 2003). Opinion by Clevenger, joined by Mayer and Rader.

A jury found claim 2 valid and infringed. The district court denied the JMOL and the Federal Circuit affirmed the judgment.

The Federal Circuit held that the preamble of the method claim was a claim limitation. "[P]remable language will limit the claim if it recites not merely a context in which the invention may be used, but the essence of the invention without which performance of the recited steps is nothing but an academic exercise." This principle generally holds true for method claims, such as the claim at issue, because the preamble does not merely describe the circumstances in which the method can be used, "but instead are the raison d'ĂȘtre of the claimed method itself."

The Federal Circuit considered a dictionary used for the first time on appeal. Like a district court, the Federal Circuit is free to consult dictionaries regardless of whether they are offered by a party in evidence or not. However, parties are obliged to make their arguments below and the Federal Circuit will rarely give weight to arguments that rely on sources brought forth for the first time on appeal. In this case, the dictionary did not support the party's proposed claim construction.

The district court erred by interpolating the word "significant" into the claim to save its construction. Rather then insert an additional limitation, the better course is to rely on a construction that does not rely on such an interpolation. However, the error was harmless because substantial evidence supports the jury's finding under the proper (broader) claim construction.

The Federal Circuit affirmed the finding that the claim was not obvious. A showing of obviousness requires both a motivation to combine and a reasonable expectation of success. In this case, some of the prior art reported failures. "[T]here can be little better evidence negating an expectation of success than actual reports of failure." http://www.fedcir.gov/opinions/02-1026.doc